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Item 9A. Controls and Procedures

2021-03-01 compared with 2020-02-21 · 755 added, 605 removed, 876 unchanged (61% of the section changed)

2 unchanged sentences

We maintain disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, which are designed to ensure that information required to be disclosed by us in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chairman and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

On April 9, 2019, we acquired MyoScience (now Pacira CryoTech, Inc., or CryoTech).

As such, the scope of our assessment of the effectiveness of our disclosure controls and procedures did not include the internal control over financial reporting of CryoTech.

These exclusions are consistent with the SEC Staff’s guidance that an assessment of a recently acquired business may be omitted from the scope of our assessment of the effectiveness of disclosure controls and procedures that are also part of internal control over financial reporting in the 12 months following the acquisition.

CryoTech accounted for 1% of our total assets and 2% of our total revenue as of and for the year ended December 31, 2019 .

Based on their evaluation as of December 31, 2020, our Chief Executive Officer and Chairman and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2020.

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Changes in Internal Control over Financial Reporting

As a result of the MyoScience Acquisition, we have commenced a project to evaluate the processes and procedures of CryoTech’s internal control over financial reporting and incorporate CryoTech’s internal control over financial reporting into our internal control over financial reporting framework.

In addition, as a result of the MyoScience Acquisition, we have implemented new processes and controls over accounting for an acquisition, including determining the fair value of the assets acquired, liabilities assumed and adjustments to the fair value of contingent consideration.

Except for the activities described above, there have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2019 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

During the quarter ended December 31, 2020, our management has integrated internal controls for the acquired MyoScience acquisition into our existing controls.

Other than integrating the MyoScience acquisition, there have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2020 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page 73

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2020, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2019 and 2018, and the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2019, and related notes (collectively, the consolidated financial statements), and our report dated February 20, 2020 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired MyoScience, Inc.

(now Pacira CryoTech, Inc.) during 2019, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2019, Pacira CryoTech Inc.’s internal control over financial reporting associated with 1% of total assets and 2% of total revenues included in the consolidated financial statements of the Company as of and for the year ended December 31, 2019.

Our audit of internal control over financial reporting of the Company also excluded an evaluation of the internal control over financial reporting of Pacira CryoTech, Inc.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements), and our report dated February 26, 2021 expressed an unqualified opinion on those consolidated financial statements.

Basis for Opinion

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Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

Short Hills, NJ

Short Hills, New Jersey

February 26, 2021

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page 74

Other Information

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Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters

Securities Authorized For Issuance Under Equity Compensation Plans

The following table sets forth certain information, as of December 31, 2019 , concerning shares of our common stock authorized for issuance under our equity compensation plans.

We have two equity compensation plans under which shares are currently authorized for issuance, our Amended and Restated 2011 Stock Incentive Plan (the “2011 Plan”) and our 2014 Employee Stock Purchase Plan (the “2014 ESPP”).

We also maintain our 2007 Stock Incentive Plan (“2007 Plan”), however, no additional awards may be issued under the 2007 Plan.

The 2007 Plan, the 2011 Plan and the 2014 ESPP were approved by stockholders.

In April 2014, our board of directors adopted (without stockholder approval) the 2014 Inducement Plan, which authorized 175,000 shares of common stock to be granted as equity awards to new employees.

Number of Securities to be Issued Upon Exercise of Outstanding Options and Rights (1) (2)

Weighted Average Exercise Price of Outstanding

Options and Rights

Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) (1)

Equity compensation plans approved by stockholders (3)

Equity compensation plans not approved by stockholders (3)

Total equity compensation plans

Awards issuable under our 2011 Plan include common stock, stock options, restricted stock, restricted stock units and other incentive awards.

Does not include 631,141 unvested shares outstanding as of December 31, 2019 in the form of restricted stock units under our 2011 Plan, which do not require the payment of any consideration by the recipients.

See Note 14, Stock Plans , to our consolidated financial statements included herein for further descriptions of our equity compensation plans.

Other information required by this item will be included in the proxy statement for our 2020 annual stockholders’ meeting and is incorporated by reference into this report.

Information required by this item will be included in the proxy statement for our 2021 annual stockholders’ meeting and is incorporated by reference into this report.

Certain Relationships and Related Transactions, and Director Independence

Information required by this item will be included in the proxy statement for our 2021 annual stockholders’ meeting and is incorporated by reference into this report.

Principal Accounting Fees and Services

Principal Accountant Fees and Services

Information required by this item will be included in the proxy statement for our 2021 annual stockholders’ meeting and is incorporated by reference into this report.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page 75

Exhibits, Financial Statement Schedules

Documents filed as part of this Annual Report on Form 10-K:

(a) Documents filed as part of this Annual Report on Form 10-K:

(1) Financial Statements

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Loss

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Stockholders’ Equity

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Notes to Consolidated Financial Statements

(2) Schedules

All financial statement schedules have been omitted because they are not required, are not applicable or the information is included in the consolidated financial statements or related notes thereto.

The following exhibits are filed with, or incorporated by reference in this Form 10-K.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page 76

EXHIBIT INDEX

Incorporation By Reference From

Number Description Form Exhibit Date

Agreement and Plan of Merger, dated March 4, 2019, by and among Pacira Pharmaceuticals, Inc., PS Merger, Inc., MyoScience, Inc., and Fortis Advisors LLC, as the securityholders’ representative.

# † 8-K 2.1 3/5/2019

Amended and Restated Certificate of Incorporation.

8-K 3.1 2/11/2011

Certificate of Amendment to the Amended and Restated Certificate of Incorporation, dated April 9, 2019.

8-K 3.1 4/9/2019

Second Amended and Restated Bylaws.

8-K 3.2 4/9/2019

Specimen Certificate Evidencing Shares of Common Stock.

Indenture (including form of 2022 Notes), dated March 13, 2017, between the Registrant and Wells Fargo Bank, National Association, as trustee.

10-Q 4.1 5/2/2019

Indenture (including form of 0.750% Convertible Senior Notes due 2025), dated July 10, 2020, between the Registrant and Wells Fargo Bank, National Association, as trustee.

8-K 4.1 7/10/2020

Indenture (including form of 2.375% Convertible Senior Notes due 2022), dated March 13, 2017, between the Registrant and Wells Fargo Bank, National Association, as trustee.

8-K 4.1 3/13/2017

Description of Securities.

Second Amended and Restated 2007 Stock Option/Stock Issuance Plan.***

Form of Stock Option Agreement under the Second Amended and Restated 2007 Stock Option/Stock Issuance Plan.***

10-K 4.3 2/21/2020

Amended and Restated 2011 Stock Incentive Plan.*** 10-Q 10.1 8/8/2019

Form of Nonstatutory Stock Option Agreement under the Amended and Restated 2011 Stock Incentive Plan.*** 8-K 10.3 6/4/2014

Form of Restricted Stock Unit Award Agreement (Employees) under the Amended and Restated 2011 Stock Incentive Plan.*** 10-Q 10.6 7/30/2015

Form of Restricted Stock Unit Award Agreement (Non-Employee Directors) under the Amended and Restated 2011 Stock Incentive Plan.*** 10-Q 10.7 7/30/2015

2014 Inducement Plan.*** 10-Q 10.1 5/1/2014

2014 Employee Stock Purchase Plan.*** 8-K 10.2 6/4/2014

Assignment Agreement, dated February 9, 1994, amended April 15, 2004, between the Registrant and Research Development Foundation.

S-1/A 10.4 12/3/2010

Stock Purchase Agreement, dated January 8, 2007, between SkyePharma, Inc.

and the Registrant.

Employment Agreement between the Registrant and David Stack.***

S-1/A 10.5 12/3/2010

Employment Agreement between the Registrant and David Stack.*** S-1/A 10.21 12/3/2010

Amendment No.

1 to Executive Employment Agreement, dated March 13, 2013, between the Registrant and David Stack.***

1 to Executive Employment Agreement, dated March 13, 2013, between the Registrant and David Stack.*** 8-K 99.3 3/18/2013

Amendment No.

2 to Executive Employment Agreement, dated June 30, 2015, between the Registrant and David Stack.***

Employment Agreement, dated November 29, 2012, between the Registrant and Kristen Williams.***

2 to Executive Employment Agreement, dated June 30, 2015, between the Registrant and David Stack.*** 10-Q 10.2 7/30/2015

Employment Agreement, dated November 29, 2012, between the Registrant and Kristen Williams.*** 10-Q 10.2 4/30/2015

Amendment No.

1 to Employment Agreement, dated March 13, 2013, between the Registrant and Kristen Williams.***

1 to Employment Agreement, dated March 13, 2013, between the Registrant and Kristen Williams.*** 10-Q 10.3 4/30/2015

Amendment No.

2 to Employment Agreement, dated June 30, 2015, between the Registrant and Kristen Williams.***

2 to Employment Agreement, dated June 30, 2015, between the Registrant and Kristen Williams.*** 10-Q 10.5 7/30/2015

Executive Employment Agreement, dated May 2, 2016, between the Registrant and Charles A.

Reinhart, III.***

Executive Employment Agreement, dated March 13, 2013, between the Registrant and Richard Scranton, M.D.***

Amendment No.

1 to Executive Employment Agreement, dated June 30, 2015, between the Registrant and Richard Scranton, M.D.***

Form of Indemnification Agreement between the Registrant and its directors and officers.***

Commercial Outsourcing Services Agreement entered into as of August 25, 2011 by the Registrant and Integrated Commercialization Solutions, Inc.

First Amendment to Commercial Outsourcing Services Agreement, dated August 1, 2013, between the Registrant and Integrated Commercialization Solutions, Inc.

Second Amendment to Commercial Outsourcing Services Agreement, dated August 25, 2014, between the Registrant and Integrated Commercialization Solutions, Inc.

Third Amendment to Commercial Outsourcing Services Agreement, dated April 29, 2015, between the Registrant and Integrated Commercialization Solutions, Inc.

Amended and Restated 2011 Stock Incentive Plan.***

Form of Nonstatutory Stock Option Agreement under the Amended and Restated 2011 Stock Incentive Plan.***

Reinhart, III.*** 10-Q 10.1 8/4/2016

Executive Employment Agreement, dated June 19, 2019, between the Registrant and Max Reinhardt.*** 10-Q 10.1 5/7/2020

Executive Employment Agreement, dated April 24, 2017, between the Registrant and Roy Winston.*** 10-Q 10.2 5/7/2020

Form of Indemnification Agreement between the Registrant and its directors and officers.*** S-1/A 10.32 1/13/2011

Commercial Outsourcing Services Agreement entered into as of August 25, 2011 by the Registrant and Integrated Commercialization Solutions, Inc.† 10-Q 10.1 8/25/2011

First Amendment to Commercial Outsourcing Services Agreement, dated August 1, 2013, between the Registrant and Integrated Commercialization Solutions, Inc.† 10-Q 10.1 10/31/2013

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page 77

Incorporation By Reference From

Form of Restricted Stock Unit Award Agreement (Employees) under the Amended and Restated 2011 Stock Incentive Plan.***

Form of Restricted Stock Unit Award Agreement (Non-Employee Directors) under the Amended and Restated 2011 Stock Incentive Plan.***

License, Development and Commercialization Agreement, dated December 5, 2012 between the Registrant and Aratana Therapeutics, Inc.

Supply Agreement, dated December 5, 2012 between the Registrant and Aratana Therapeutics, Inc.

2014 Inducement Plan.***

2014 Employee Stock Purchase Plan.***

Strategic Co-Production Agreement dated April 4, 2014, by and between the Registrant and Patheon UK Limited.

Manufacturing and Supply Agreement dated April 4, 2014, by and between the Registrant and Patheon UK Limited.

Technical Transfer and Service Agreement dated April 4, 2014, by and between the Registrant and Patheon UK Limited.

Amended and Restated Consulting Agreement, dated April 3, 2012, between the Registrant and Gary Pace.***

Second Amended and Restated Consulting Agreement, dated August 17, 2012, between the Registrant and Gary Pace.***

Third Amendment to Consulting Agreement, dated September 11, 2013, between the Registrant and Gary Pace.***

Fourth Amendment to Consulting Agreement, dated November 25, 2015, between the Registrant and Gary Pace.***

Co-Promotion Agreement, dated January 24, 2017, between the Registrant and DePuy Synthes Sales, Inc.

Number Description Form Exhibit Date

Second Amendment to Commercial Outsourcing Services Agreement, dated August 25, 2014, between the Registrant and Integrated Commercialization Solutions, Inc.† 10-Q 10.1 10/30/2014

Third Amendment to Commercial Outsourcing Services Agreement, dated April 29, 2015, between the Registrant and Integrated Commercialization Solutions, Inc.† 10-Q 10.1 7/30/2015

Fourth through Eleventh Amendments to Commercial Outsourcing Services Agreement, between the Registrant and Integrated Commercialization Solutions, Inc.†† 10-Q 10.3 5/7/2020

Pacira BioSciences, Inc.

Deferred Compensation Plan.*** 8-K 10.1 6/11/2020

Pacira BioSciences, Inc.

Long-Term Incentive Plan.*** 8-K 10.1 12/7/2020

Strategic Co-Production Agreement dated April 4, 2014, by and between the Registrant and Patheon UK Limited.† 10-Q 10.1 7/31/2014

Manufacturing and Supply Agreement dated April 4, 2014, by and between the Registrant and Patheon UK Limited.† 10-Q 10.2 7/31/2014

Technical Transfer and Service Agreement dated April 4, 2014, by and between the Registrant and Patheon UK Limited.† 10-Q 10.3 7/31/2014

Amended and Restated Consulting Agreement, dated April 3, 2012, between the Registrant and Gary Pace.*** 10-Q 10.1 5/9/2012

Second Amended and Restated Consulting Agreement, dated August 17, 2012, between the Registrant and Gary Pace.*** 10-Q 10.1 11/1/2012

Third Amendment to Consulting Agreement, dated September 11, 2013, between the Registrant and Gary Pace.*** 10-Q 10.3 10/31/2013

Fourth Amendment to Consulting Agreement, dated November 25, 2015, between the Registrant and Gary Pace.*** 10-K 10.57 2/25/2016

Co-Promotion Agreement, dated January 24, 2017, between the Registrant and DePuy Synthes Sales, Inc.† 10-Q 10.1 5/4/2017

First Amendment to Co-Promotion Agreement, dated April 19, 2018, between the Registrant and DePuy Synthes Sales, Inc.

Second Amendment to Co-Promotion Agreement, dated December 21, 2018, between the Registrant and DePuy Synthes Sales, Inc.

Executive Employment Agreement, dated May 29, 2017, between the Registrant and Dennis McLoughlin.***

10-Q 10.1 5/3/2018

Second Amendment to Co-Promotion Agreement, dated December 21, 2018, between the Registrant and DePuy Synthes Sales, Inc.† 10-K 10.41 2/28/2019

Executive Employment Agreement, dated May 29, 2017, between the Registrant and Dennis McLoughlin.*** 10-Q 10.1 5/2/2019

Subsidiaries of the Registrant.*

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Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

Inline XBRL Instance Document.*

Inline XBRL Taxonomy Schema Document.*

Inline XBRL Taxonomy Calculation Linkbase Document.*

Inline XBRL Taxonomy Label Linkbase Document.*

Inline XBRL Taxonomy Presentation Linkbase Document.*

Inline XBRL Taxonomy Extension Definition Linkbase Document.*

101.INS* Inline XBRL Instance Document.*

101.SCH* Inline XBRL Taxonomy Schema Document.*

101.CAL* Inline XBRL Taxonomy Calculation Linkbase Document.*

101.LAB* Inline XBRL Taxonomy Label Linkbase Document.*

101.PRE* Inline XBRL Taxonomy Presentation Linkbase Document.*

101.DEF* Inline XBRL Taxonomy Extension Definition Linkbase Document.*

104* Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101).

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page 78

* Filed herewith.

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† Confidential treatment has been requested or granted as to certain portions, which portions were omitted and filed separately with the Securities and Exchange Commission pursuant to a Confidential Treatment Request.

†† Certain portions of the exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K.

The omitted information is (i) not material and (ii) would likely cause competitive harm to the Company if publicly disclosed.

# Certain schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K under the Securities Exchange Act of 1934, as amended.

1 unchanged sentence

Form 10-K Summary

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page 79

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.

1 unchanged sentence

/s/ DAVID STACK

February 20, 2020

February 26, 2021 By:

Chief Executive Officer and Chairman

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

/s/ DAVID STACK

Director, Chief Executive Officer and Chairman

(Principal Executive Officer)

February 20, 2020

Signature Title Date

/s/ DAVID STACK Director, Chief Executive Officer and Chairman

(Principal Executive Officer) February 26, 2021

/s/ CHARLES A.

REINHART, III

Chief Financial Officer

(Principal Financial Officer)

February 20, 2020

REINHART, III Chief Financial Officer

(Principal Financial Officer) February 26, 2021

Reinhart, III

/s/ LAUREN RIKER

Vice President, Finance

(Principal Accounting Officer)

February 20, 2020

/s/ LAURA BREGE

February 20, 2020

/s/ LAUREN RIKER Vice President, Finance

(Principal Accounting Officer) February 26, 2021

/s/ LAURA BREGE Director February 26, 2021

/s/ CHRISTOPHER J.

February 20, 2020

CHRISTIE Director February 26, 2021

Christopher J.

/s/ MARK FROIMSON

February 20, 2020

/s/ MARK FROIMSON Director February 26, 2021

Mark Froimson

/s/ YVONNE GREENSTREET

February 20, 2020

/s/ YVONNE GREENSTREET Director February 26, 2021

Yvonne Greenstreet

/s/ MARK KRONENFELD

February 20, 2020

/s/ MARK KRONENFELD Director February 26, 2021

Mark Kronenfeld

/s/ JOHN LONGENECKER

February 20, 2020

/s/ JOHN LONGENECKER Director February 26, 2021

John Longenecker

/s/ GARY PACE

February 20, 2020

/s/ ANDREAS WICKI

February 20, 2020

/s/ GARY PACE Director February 26, 2021

/s/ ANDREAS WICKI Director February 26, 2021

Andreas Wicki

/s/ PAUL HASTINGS

Lead Director

February 20, 2020

/s/ PAUL HASTINGS Lead Director February 26, 2021

Paul Hastings

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page 80

PACIRA BIOSCIENCES, INC.

ANNUAL REPORT ON FORM 10-K

4 unchanged sentences

Consolidated Statements of Operations for the years ended December 31, 20 20 , 201 9 and 201 8

Consolidated Statements of Comprehensive Loss for the years ended December 31, 2019, 2018 and 2017

Consolidated Statements of Comprehensive Income ( Loss ) for the years ended December 31, 20 20 , 201 9 and 201 8

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 20 20 , 201 9 and 201 8

1 unchanged sentence

Notes to Consolidated Financial Statements

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-1

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

3 unchanged sentences

We have audited the accompanying consolidated balance sheets of Pacira BioSciences, Inc.

and subsidiaries (the Company) as of December 31, 2019 and 2018, the related consolidated statements of operations, comprehensive loss, stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2019, and the related notes (collectively, the consolidated financial statements).

and subsidiaries (the Company) as of December 31, 2020 and 2019, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three‑year period ended December 31, 2020, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of the years in the three‑year period ended December 31, 2020, in conformity with U.S.

14 unchanged sentences

We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

Evaluation of the initial fair value measurement of the developed technology intangible asset acquired in connection with the acquisition of MyoScience, Inc.

As discussed in Notes 5 and 9 to the consolidated financial statements, the acquisition of MyoScience, Inc.

resulted in the recording of the developed technology intangible asset of $110.0 million.

The determination of the acquisition date fair value of the developed technology intangible asset required the Company to make significant estimates and assumptions regarding forecasted revenues and the discount rate.

We identified the evaluation of the initial fair value measurement of the developed technology intangible asset acquired in connection with the acquisition of MyoScience, Inc.

as a critical audit matter.

Testing the assumptions regarding forecasted revenues and the discount rate, which were used to estimate the fair value, involved a high degree of judgment.

In addition, the fair value of the developed technology intangible asset was challenging to test due to the sensitivity of the fair value determination to changes in these assumptions.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s acquisition-date valuation process, including controls over the development of the forecasted revenues and the discount rate.

We performed sensitivity analyses over the forecasted revenues to assess the impact of changes

in those assumptions on the Company’s determination of the fair value of the developed technology intangible asset.

We evaluated the future revenue growth used by the Company to determine forecasted revenues, by comparing them to industry data, as well as evaluated the relevance and reliability of third-party market data points used to develop the future revenue growth.

We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the Company’s discount rate by comparing the Company’s inputs to the discount rate, to publicly available market data for the comparable entities used by the Company and assessing the resulting discount rate.

They also assisted in testing the fair value estimate of the developed technology intangible asset acquired using the Company’s cash flow assumptions and the Company’s discount rate, and comparing the results to the Company’s fair value estimate.

Evaluation of the fair value measurement of the contingent consideration liabilities associated with the acquisition of MyoScience, Inc.

As discussed in Notes 5 and 12 to the consolidated financial statements, the initial fair value of the contingent consideration liability related to the acquisition of MyoScience, Inc.

was $28.5 million.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relates to accounts or disclosures that are material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments.

The communication of a critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Fair value measurement of the contingent consideration liabilities associated with the acquisition of MyoScience, Inc.

As discussed in Notes 5 and 12 to the consolidated financial statements, the fair value of the contingent consideration liabilities related to the acquisition of MyoScience, Inc.

was $28.3 million as of December 31, 2020.

The contingent consideration liabilities are re-measured each reporting period, with a maximum remaining payout as of December 31, 2020 of $58.0 million.

The determination of the fair value of the contingent consideration liabilities related to achieving commercial and regulatory milestones requires the Company to make significant estimates and assumptions.

These estimates and assumptions include forecasts of revenues, estimated probabilities and timing of achieving specified commercial and regulatory milestones, volatility and the risk adjusted discount rate.

We identified the evaluation of the initial and ongoing fair value measurement of the contingent consideration liabilities related to achieving commercial and regulatory milestones associated with the acquisition of MyoScience, Inc.

as a critical audit matter.

Testing the simulation and milestone based models, including non-observable inputs, such as the forecasted revenue, estimated probability and timing of achieving specific commercial and regulatory milestones, the volatility and the risk adjusted discount rate involved a high degree of subjectivity.

The primary procedures we performed to address this critical audit matter included the following.

We tested certain internal controls over the Company’s initial and ongoing fair value process for contingent consideration liabilities related to achieving commercial and regulatory milestones, including controls over the forecasted revenues, estimated probabilities and timing of achieving specified milestones, the volatility and the risk adjusted discount rate.

These estimates and assumptions include forecasts of revenues, estimated probabilities and timing of achieving specified commercial and regulatory milestones, volatility and discount rates.

We identified the evaluation of the ongoing fair value measurement of the contingent consideration liabilities related to achieving commercial and regulatory milestones associated with the acquisition of MyoScience, Inc.

as a critical audit

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-2

Testing the simulation and milestone based models, including non-observable inputs, such as the forecasted revenue, estimated probability and timing of achieving specific commercial and regulatory milestones, the volatility and the discount rates involved a high degree of subjectivity.

The following are the primary procedures we performed to address this critical audit matter.

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s ongoing fair value process for contingent consideration liabilities related to achieving commercial and regulatory milestones.

This included controls related to the forecasted revenues, estimated probabilities and timing of achieving specified milestones, the volatility and the discount rates.

We evaluated the forecasted revenue and commercial and regulatory milestone assumptions used in the Company’s models by comparing them to industry benchmarks and other relevant and reliable third-party market data, as well as evaluated the relevance and reliability of third-party market data points used to develop the future revenue growth and commercial and regulatory milestones.

We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the Company’s volatility and risk adjusted discount rate, by comparing the Company’s inputs to the volatility and risk adjusted discount rate, to publicly available market data for the comparable entities used by the Company and assessing the resulting volatility and the risk adjusted discount rate.

They also assisted in testing the estimate of the initial and ongoing fair value of the contingent consideration liabilities using the Company’s forecasted revenues, volatility and the risk adjusted discount rate, and comparing the results to the Company’s fair value estimates.

We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the Company’s volatility and discount rates, by comparing the Company’s inputs to the volatility and the discount rates, to publicly available market data for the comparable entities used by the Company and assessing the resulting volatility and discount rates.

They also assisted in testing the estimate of the ongoing fair value of the contingent consideration liabilities using the Company’s forecasted revenues, volatility and the discount rates, and comparing the results to the Company’s fair value estimates.

We have served as the Company’s auditor since 2015.

Short Hills, NJ

Short Hills, New Jersey

February 26, 2021

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-3

PACIRA BIOSCIENCES, INC.

CONSOLIDATED BALANCE SHEETS

10 unchanged sentences

Right-of-use assets, net 74,492 38,124

Goodwill 99,547 99,547

Intangible assets, net 96,521 104,387

Equity investment and other assets

Deferred tax assets 106,164 —

Equity investments and other assets 14,019 10,971

Total assets $ 1,274,513 $ 831,065

LIABILITIES AND STOCKHOLDERS’ EQUITY

23 unchanged sentences

Accumulated deficit ( 253,875 ) ( 399,398 )

Accumulated other comprehensive income (loss)

Accumulated other comprehensive income 318 322

Total stockholders’ equity 619,688 354,944

2 unchanged sentences

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-4

PACIRA BIOSCIENCES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

Net product sales $ 426,614 $ 418,926 $ 332,427

9 unchanged sentences

Total operating expenses 383,297 410,546 321,362

Income (loss) from operations

Income from operations 46,350 10,480 15,915

Other (expense) income:

2 unchanged sentences

Loss on early extinguishment of debt ( 8,071 ) — —

Other, net 2,852 ( 4,976 ) ( 888 )

Total other expense, net ( 26,261 ) ( 21,228 ) ( 16,340 )

Loss before income taxes

Income tax expense

Net loss per share:

Basic and diluted net loss per common share

Income (loss) before income taxes 20,089 ( 10,748 ) ( 425 )

Income tax benefit (expense) 125,434 ( 268 ) ( 46 )

Net income (loss) $ 145,523 $ ( 11,016 ) $ ( 471 )

Net income (loss) per share:

Basic net income (loss) per common share $ 3.41 $ ( 0.27 ) $ ( 0.01 )

Diluted net income (loss) per common share $ 3.33 $ ( 0.27 ) $ ( 0.01 )

Weighted average common shares outstanding:

Basic and diluted

Basic 42,671 41,513 40,911

Diluted 43,682 41,513 40,911

See accompanying notes to consolidated financial statements.

Pacira BioSciences, Inc.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS

| 2020 Form 10-K | Page F-5

PACIRA BIOSCIENCES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

(In thousands)

Year Ended December 31,

2020 2019 2018

Net income (loss) $ 145,523 $ ( 11,016 ) $ ( 471 )

Other comprehensive income (loss):

Net unrealized gain (loss) on investments

Net unrealized gain (loss) on investments, net of tax ( 3 ) 602 174

Foreign currency translation adjustments ( 1 ) — —

Total other comprehensive income (loss) ( 4 ) 602 174

Comprehensive loss

Comprehensive income (loss) $ 145,519 $ ( 10,414 ) $ ( 297 )

See accompanying notes to consolidated financial statements

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-6

PACIRA BIOSCIENCES, INC.

CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

1 unchanged sentence

(In thousands)

Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Income (Loss)

Income (Loss) Total

Shares Amount

Balance at December 31, 2017 40,669 $ 41 $ 669,032 $ ( 389,136 ) $ ( 454 ) $ 279,483

1 unchanged sentence

of Accounting Standards Update 2014-09

(Note 3) — — — 1,361 — 1,361

Cumulative effect adjustment of the adoption

of Accounting Standards Update 2018-07

(Note 3) — — ( 20 ) 20 — —

Exercise of stock options 333 — 7,170 — — 7,170

3 unchanged sentences

Stock-based compensation — — 31,725 — — 31,725

Issuance of common stock upon

conversion of 2019 convertible senior notes

Retirement of equity component

of 2019 convertible senior notes

Equity component of 2022 convertible

senior notes issued, net

Net unrealized loss on investments

Other comprehensive income (Note 13) — — — — 174 174

Net loss — — — ( 471 ) — ( 471 )

Balance at December 31, 2018 41,223 41 709,691 ( 388,226 ) ( 280 ) 321,226

1 unchanged sentence

of Accounting Standards Update 2016-02

Cumulative effect adjustment of the adoption

of Accounting Standards Update 2018-07

(Note 3) — — — ( 156 ) — ( 156 )

Exercise of stock options 425 1 8,468 — — 8,469

3 unchanged sentences

Stock-based compensation — — 33,650 — — 33,650

Net unrealized gain on investments

Retirement of equity component

of 2019 convertible senior notes (Note 11) — — ( 233 ) — — ( 233 )

Other comprehensive income (Note 13) — — — — 602 602

Net loss — — — ( 11,016 ) — ( 11,016 )

Balance at December 31, 2019 41,908 42 753,978 ( 399,398 ) 322 354,944

Cumulative effect adjustment of the adoption

of Accounting Standards Update 2016-02

Exercise of stock options 1,428 2 45,227 — — 45,229

4 unchanged sentences

Retirement of equity component

of 2019 convertible senior notes

Net unrealized gain on investments

of 2022 convertible senior notes (Note 11) — — ( 33,089 ) — — ( 33,089 )

Equity component of 2025 convertible

senior notes issued, net of deferred taxes

of $ 20,450 (Note 11)

— — 64,619 — — 64,619

Other comprehensive loss (Note 13) — — — — ( 4 ) ( 4 )

Net income — — — 145,523 — 145,523

Balance at December 31, 2020 43,637 $ 44 $ 873,201 $ ( 253,875 ) $ 318 $ 619,688

1 unchanged sentence

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-7

PACIRA BIOSCIENCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

Operating activities:

Adjustments to reconcile net loss to net cash provided by operating activities:

Net income (loss) $ 145,523 $ ( 11,016 ) $ ( 471 )

Adjustments to reconcile net income (loss) to net cash provided by operating activities:

Deferred taxes ( 126,613 ) ( 1,828 ) —

Depreciation of fixed assets and amortization of intangible assets 19,908 19,576 13,165

5 unchanged sentences

Changes in contingent consideration (after MyoScience, Inc.

Loss on investment (net of stock dividend) and other non-operating income, net

acquisition) 5,204 16,672 —

(Gain) loss on investment (net of stock dividend) and other non-operating income, net ( 1,618 ) 4,315 854

Changes in operating assets and liabilities (net of MyoScience, Inc.

21 unchanged sentences

Proceeds from shares issued under employee stock purchase plan 2,546 2,402 1,784

Proceeds from issuance of 2022 convertible senior notes

Proceeds from debt component of the 2025 convertible senior notes 314,708 — —

Proceeds from equity component of the 2025 convertible senior notes 87,792 — —

Repayment of 2019 convertible senior notes — ( 338 ) —

Repayment of 2022 convertible senior notes ( 176,793 ) — —

Retirement of equity component of the 2022 convertible senior notes ( 33,089 ) — —

Conversion premium on 2019 convertible senior notes — ( 233 ) —

Payment of debt issuance and financing costs ( 12,487 ) — —

Payment of contingent consideration to MyoScience, Inc.

securityholders ( 5,591 ) ( 6,630 ) —

Payment of debt issuance and financing costs

Costs for conversions of convertible senior notes

Net cash provided by financing activities 222,304 3,670 8,954

Net (decrease) increase in cash and cash equivalents

Net increase (decrease) in cash and cash equivalents 21,729 ( 54,298 ) 78,400

Cash and cash equivalents, beginning of year 78,228 132,526 54,126

2 unchanged sentences

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-8

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

1 unchanged sentence

Year Ended December 31,

2020 2019 2018

Supplemental cash flow information:

2 unchanged sentences

Non-cash investing and financing activities:

Issuance of common stock from conversion of 2019 convertible senior notes

Retirement of equity component of 2019 convertible senior notes

Net increase (decrease) in accrued fixed assets

Fixed assets included in accounts payable and accrued liabilities $ 9,288 $ 3,019 $ 2,894

Net increase in contingent consideration liabilities $ — $ 28,470 $ —

1 unchanged sentence

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-9

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1 unchanged sentence

Pacira BioSciences, Inc.

and its subsidiaries (collectively, the “Company” or “Pacira”) is a leading provider of non-opioid pain management and regenerative health solutions to advance and improve outcomes for health care practitioners and their patients.

The Company’s long-acting, local analgesic, EXPAREL ® (bupivacaine liposome injectable suspension), was commercially launched in the United States in April 2012.

and its subsidiaries (collectively, the “Company” or “Pacira”) is the industry leader in its commitment to non-opioid pain management and regenerative health solutions to improve patients’ journeys along the neural pain pathway.

The Company’s long-acting, local analgesic, EXPAREL ® (bupivacaine liposome injectable suspension), was commercially launched in the United States in April 2012 and approved by the European Commission in November 2020.

EXPAREL utilizes DepoFoam ® , a unique and proprietary delivery technology that encapsulates drugs without altering their molecular structure, and releases them over a desired period of time.

In April 2019, the Company added iovera° ® to its commercial offering with its acquisition of MyoScience, Inc., or MyoScience.

In April 2019, the Company added iovera° ® to its commercial offering with the acquisition of MyoScience, Inc., or MyoScience.

The iovera° system is a handheld cryoanalgesia device used to deliver a precise, controlled application of cold temperature to only targeted nerves.

The Company changed its name from Pacira Pharmaceuticals, Inc.

to Pacira BioSciences, Inc.

upon completing the acquisition of MyoScience in order to better reflect a broadening portfolio of innovative non-opioid pain management and regenerative health solutions.

See Note 5, MyoScience Acquisition , for more information.

Pacira is subject to risks common to companies in similar industries and stages, including, but not limited to, competition from larger companies, reliance on revenue from two products, reliance on a limited number of manufacturing sites, new technological innovations, dependence on key personnel, reliance on third-party service providers and sole source suppliers, protection of proprietary technology, compliance with government regulations and risks related to cybersecurity.

Novel Coronavirus (COVID-19) Pandemic

During 2020, the Company’s net product sales were negatively impacted by the global pandemic caused by a novel strain of coronavirus (COVID-19), which mandated significant postponement or suspension in the scheduling of elective surgical procedures resulting from public health guidance and government directives.

Elective surgical restrictions began to lift on a state-by-state basis in April 2020;

however, the Company does not know how long it will take the surgical community to return to normal operations or if states will return to placing restrictions on elective surgical procedures.

The Company’s manufacturing sites are operational and have implemented new safety protocols and guidelines as recommended by federal, state and local governments.

To date, there have been no material impacts to the Company’s supply chain.

The situation remains dynamic and subject to rapid and possibly material changes.

Additional negative impacts may also arise from the COVID-19 pandemic that the Company is unable to foresee.

The nature and extent of such impacts will depend on future developments, which are highly uncertain and cannot be predicted.

NOTE 2— SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

6 unchanged sentences

The preparation of financial statements in conformity with GAAP requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities, including disclosure of contingent assets and contingent liabilities, at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Estimates are used for, among other things, revenue recognition, inventory costs, impairments of equity investments, long-lived assets, goodwill, liabilities and accruals, including contingent consideration, and the valuation of deferred tax assets.

Estimates are used for, among other things, revenue recognition, stock-based compensation, inventory costs, impairments of equity investments, long-lived assets, goodwill, liabilities and accruals, including contingent consideration, convertible senior notes, and the valuation of deferred tax assets.

The Company’s critical accounting policies are those that are both most important to the Company’s consolidated financial condition and results of operations and require the most difficult, subjective or complex judgments on the part of management in their application, often as a result of the need to make estimates about the effect of matters that are inherently uncertain.

5 unchanged sentences

and (iv) license fees and milestone payments.

To date, there has been no revenue from sales of EXPAREL or iovera° in the European Union, or E.U.

See Note 4, Revenue , for further information on the Company’s accounting policies related to revenue from contracts with customers.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-10

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Collaborative Licensing and Milestone Revenue

1 unchanged sentence

In determining how and when to recognize the revenue under a collaboration agreement, the Company must assess whether the license is distinct, which depends upon whether the customer can benefit from the license and whether the license is separate from other performance obligations in the agreement.

If the license is distinct, the Company must further assess whether the customer has a right to access or a right to use the license depending on whether the functionality of the license is expected to substantively change

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

If the license is not expected to substantively change, the revenue is recognized at the point in time when the license is provided.

2 unchanged sentences

Milestone payments based on a non-sales metric such as a development-based milestone (e.g.

obtaining regulatory approval) represent variable consideration and are included in the transaction price subject to any constraints.

obtaining regulatory approval) represent variable consideration and would be included in the transaction price subject to any constraints.

If the milestone payments relate to future development, the timing of recognition depends upon historical experience and the significance a third-party has on the outcome.

8 unchanged sentences

The Company sells its bupivacaine liposome injectable suspension for veterinary use to a third-party licensee and sells iovera° directly to end users.

The table below includes the percentage of net product sales comprised by the Company’s three largest wholesalers in each period presented:

The table below includes the percentage of revenues comprised by the Company’s three largest wholesalers in each period presented:

Year Ended December 31,

2020 2019 2018

Largest wholesaler 31 % 34 % 34 %

1 unchanged sentence

Third largest wholesaler 25 % 26 % 26 %

Total 87 % 89 % 90 %

The Company had no revenue from outside the U.S.

during the year ended December 31, 2019 .

during the years ended December 31, 2020 and 2019.

Revenue from outside the U.S.

accounted for less than 1 % of the Company’s total revenue for the year ended 2018 and 1 % of the Company’s total revenue for the year ended December 31, 2017 .

accounted f or less than 1 % of the Company’s total revenue for the year ended December 31, 2018.

Research and Development Expenses

7 unchanged sentences

Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.

As of December 31, 2019 and 2018 , the Company’s net deferred tax assets were fully offset by a valuation allowance because there is significant doubt regarding the Company’s ability to utilize such net deferred tax assets.

The Company accrues interest and penalties, if any, on underpayment of income taxes related to unrecognized tax benefits as a component of income tax expense in its consolidated statements of operations.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-11

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Stock-Based Compensation

The Company’s stock-based compensation includes grants of stock options and restricted stock units, or RSUs, to employees, consultants and non-employee directors, in addition to the opportunity for employees to participate in an employee stock purchase plan.

The Company’s stock-based compensation consists of grants of stock options and restricted stock units, or RSUs, to employees, consultants and non-employee directors, in addition to the opportunity for employees to participate in an employee stock purchase plan.

The expense associated with these programs is recognized in the Company’s consolidated statements of operations based on their fair values as they are earned under the applicable vesting terms or the length of an offering period.

In calculating the estimated fair value of stock options granted, the Company uses the Black-Scholes option valuation model, or Black-Scholes model, which requires the consideration of the following variables for purposes of estimating fair value:

• Expected term of the option

11 unchanged sentences

Cash equivalents include corporate debt securities, asset backed securities and money market funds.

As of December 31, 2019 , the carrying value of money market funds was $ 28.5 million , which is included in cash and cash equivalents.

As of December 31, 2018 , the carrying value of money market funds was $ 40.6 million , corporate debt securities was $ 21.4 million and asset backed securities was $ 4.9 million , all of which were included in cash and cash equivalents.

As of December 31, 2020, the carrying value of money market funds was $ 51.8 million and commercial paper was $ 6.5 million and as of December 31, 2019, the carrying value of money market funds was $ 28.5 million, all of which are included in cash and cash equivalents.

The carrying values approximate fair value as of December 31, 2020 and 2019.

Short-Term and Long-Term Investments

Short-term investments consist of asset-backed securities collateralized by credit card receivables, investment grade commercial paper and corporate bonds with maturities of greater than three months, but less than one year.

Long-term investments consist of asset-backed securities collateralized by credit card receivables and corporate bonds with maturities greater than one year.

The Company determines the appropriate classification of its investments at the time of purchase and reevaluates such determination at each balance sheet date.

Short-term investments consist of asset-backed securities collateralized by credit card receivables, investment grade commercial paper, corporate and government bonds, and other bonds issued in the U.S.

(and denominated in the U.S.

dollar) by foreign entities, all with maturities of greater than three months, but less than one year.

Long-term investments consist of corporate and government agency bonds with maturities greater than one year.

The Company evaluates the classification of its investments at the time of purchase and re-evaluates such determination at each balance sheet date, which includes an assessment of the intent to hold the available-for-sale securities.

The Company’s investment policy sets minimum credit quality criteria and maximum maturity limits on its investments to provide for preservation of capital, liquidity and a reasonable rate of return.

1 unchanged sentence

Available-for-sale securities are recorded at fair value, based on current market valuations.

Unrealized holding gains and losses on available-for-sale securities are excluded from net income (loss) and are reported as a separate component of accumulated other comprehensive income (loss) until realized.

Unrealized holding gains and losses on available-for-sale securities (except for credit losses) are excluded from net income (loss) and are reported as a separate component of accumulated other comprehensive income (loss) until realized.

Realized gains and losses are included in interest income in the consolidated statements of operations and are derived using the specific identification method for determining the cost of the securities sold.

The Company evaluates whether a credit loss exists, and in the event a credit loss does exist, the credit loss is recognized in the consolidated statements of operations, based on the amount that the fair value is less than the amortized cost.

Inventories consist of finished goods held for sale and distribution, raw materials and work in process.

1 unchanged sentence

The Company periodically reviews its inventory to identify obsolete, slow-moving, or otherwise unsalable inventories, and establishes allowances for situations in which the cost of the inventory is not expected to be recovered.

Fixed assets are recorded at cost, net of accumulated depreciation and amortization.

The Company reviews its property, plant and equipment assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-12

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Fixed assets are recorded at cost, net of accumulated depreciation and amortization.

The Company reviews its property, plant and equipment assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Depreciation of fixed assets is provided over their estimated useful lives on a straight-line basis.

1 unchanged sentence

Useful lives by asset category are as follows:

Asset Category

Computer equipment and software

Office furniture and equipment

Manufacturing and laboratory equipment

5 to 10 years

Asset Category Useful Life

Computer equipment and software 1 to 3 years

Office furniture and equipment 5 years

Manufacturing and laboratory equipment 5 to 10 years

Asset Retirement Obligations

The Company has contractual obligations stemming from certain of its lease agreements to return leased space to its original condition upon termination of the lease agreement.

The Company records an asset retirement obligation, or ARO, along with a corresponding capital asset in an amount equal to the estimated fair value of the ARO, based on the present value of expected future cash flows.

In subsequent periods, the Company records interest expense to accrete the ARO to its full value.

The Company has contractual obligations stemming from certain of its lease agreements to return leased space to its original condition upon termination of such lease agreements.

The Company records its asset retirement obligations, or ARO, along with a corresponding capital asset in an amount equal to the estimated fair value of the ARO, based on the present value of expected future cash flows.

In subsequent periods, the Company records expense to accrete the ARO to its full value.

Each ARO capital asset is depreciated over the depreciable term of the associated asset.

Effective January 1, 2019, the Company recognizes right-of-use, or ROU, assets and lease liabilities at the commencement of its lease agreements.

The Company recognizes right-of-use, or ROU, assets and lease liabilities at the commencement of its lease agreements.

The leases are evaluated at commencement to determine whether they should be classified as operating or financing leases.

Lease costs associated with operating leases are recognized on a straight-line basis, while lease costs for financing leases are recognized over the lease term using the effective interest method.

To date, the Company does not have any financing leases.

The Company does not have any financing leases.

The amount of ROU assets and lease liabilities to be recognized is impacted by the type of lease payments, the lease term and the incremental borrowing rate.

4 unchanged sentences

Assets acquired and liabilities assumed in a business combination that arise from contingencies are generally recognized at fair value.

If fair value cannot be determined, the asset or liability is recognized if probable and reasonably estimable;

if these criteria are not met, no asset or liability is recognized.

If fair value can be determined, the asset or liability is recognized;

if fair value is not determinable, then no asset or liability is recognized.

Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

3 unchanged sentences

Contingent Consideration

Subsequent to an acquisition, the Company measures contingent consideration arrangements at fair value for each period with changes in fair value recognized in the consolidated statements of operations as acquisition-related charges.

Subsequent to an acquisition, the Company measures contingent consideration arrangements at fair value each period, with changes in fair value recognized in the consolidated statements of operations as acquisition-related charges.

Changes in contingent consideration can result from changes in the assumed achievement and timing of estimated sales, costs of goods sold and regulatory approvals.

In the absence of new information, changes in fair value reflect the passage of time towards achievement of the milestones, and are accrued based on an accretion schedule.

Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired in a business combination and is not amortized, but is subject to impairment at least annually or when a triggering event occurs that could indicate a potential impairment.

In the absence of new information, changes in fair value reflect the passage of time towards achievement of the milestones, and are accreted to the period in which payments are expected to be made.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-13

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Goodwill represents the excess of the purchase price over the estimated fair value of the net assets acquired in a business combination and is not amortized, but is subject to impairment testing at least annually or when a triggering event occurs that could indicate a potential impairment.

Intangible Assets

Intangible assets with definite useful lives are amortized on a straight-line basis over their estimated useful lives and are reviewed for impairment if certain events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Intangible assets are recorded at cost, net of accumulated amortization.

Intangible assets with definite useful lives are amortized on a straight-line basis over their estimated useful lives and are recorded at cost, net of accumulated amortization.

Equity Investments

The Company historically accounted for its equity investment in a minority interest of a company over which it did not exercise significant influence using the cost method.

The equity investment did not have a readily determinable fair value.

Effective January 1, 2018, the Company elected to account for its equity investment at its cost less impairment, if any, plus or minus any changes resulting from observable price changes in orderly transactions for a similar investment.

As of the fourth quarter of 2019, the equity investment held by the C ompany is now publicly traded and has a readily determinable fair value.

The equity investment is now measured at fair value with changes in the fair value recognized in other income (expense).

The Company holds two separate investments in equity securities, one with a readily determined fair value and one without a readily determinable fair value.

In the fourth quarter of 2019, the equity investment then held became publicly traded and thereafter, has been recognized at its fair value at each reporting period with any unrealized holding gains (losses) included in other income (expense).

The equity method investment without a readily determinable fair value is recognized at its cost less any impairment, plus or minus any changes resulting from observable price changes in orderly transactions for a similar investment.

Impairment of Long-Lived Assets

4 unchanged sentences

The Company separately accounts for the liability and equity components of convertible debt instruments by allocating the proceeds from the issuance between the liability component and the embedded conversion option, or equity component.

This is done in accordance with accounting for convertible debt instruments that may be settled in cash (including partial cash settlement) upon conversion.

The value of the equity component is calculated by first measuring the fair value of the liability component, using the interest rate of a similar liability that does not have a conversion feature, as of the issuance date.

1 unchanged sentence

The Company recognizes the amortization of the resulting discount as part of interest expense in its consolidated statements of operations.

Upon settlement of the convertible senior notes, the liability component is measured at fair value.

Upon settlement of the convertible debt, the liability component is measured at fair value.

The Company allocates a portion of the fair value of the total settlement consideration transferred to the extinguishment of the liability component equal to the fair value of that component immediately prior to the settlement.

Any difference between the consideration attributed to the liability component and the net carrying amount of the liability component, including any unamortized debt issuance costs and debt discount, is recognized as a gain or loss in the consolidated statements of operations.

Any remaining consideration is allocated to the reacquisition of the equity component and is recognized as a reduction of additional paid-in capital.

Any remaining consideration is allocated to the retirement of the equity component and is recognized as a reduction of additional paid-in capital.

Per Share Data

1 unchanged sentence

Diluted net income (loss) per common share is calculated by dividing net income (loss) available (attributable) to common stockholders as adjusted for the effect of dilutive securities, if any, by the weighted average number of shares of common stock and dilutive common stock outstanding during the period.

Potential common shares include the shares of common stock issuable upon the exercise of outstanding stock options, the RSUs expected to vest, the shares to be purchased under the Company’s employee stock purchase plan (using the treasury stock method), the excess conversion value on the Company’s convertible senior notes and the shares of common stock that could be issued as consideration for contingent milestone payments.

Potential common shares include the shares of common stock issuable upon the exercise of outstanding stock options, the RSUs expected to vest, the shares to be purchased under the Company’s employee stock purchase plan (using the treasury stock method), and the excess conversion value on the Company’s convertible senior notes.

Foreign Currency Translation

The balance sheet accounts of foreign subsidiaries with functional currencies other than United States Dollar are translated using the exchange rate at the respective balance sheet dates.

Revenues and expenses are translated using average exchange rates for each calendar month during the year.

Translation adjustments are recorded as a component of accumulated

The balance sheet accounts of foreign subsidiaries with functional currencies other than the U.S.

Dollar are translated using the exchange rate at each respective balance sheet date.

Revenues and expenses are translated using average exchange

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-14

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

other comprehensive income (loss) in the consolidated financial statements.

To date, foreign currency translation has been de minimis.

rates for each calendar month during the year.

Translation adjustments are recorded as a component of accumulated other comprehensive income (loss) in the consolidated financial statements.

Segment Reporting

The Company is managed and operated as a single business focused on the discovery, 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 and Chairman manages and allocates resources at a consolidated level.

Accordingly, the Company views its business as one reportable operating segment to evaluate performance, allocate resources, set operational targets and forecast its future period financial results.

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 manages and allocates resources at a consolidated level.

Accordingly, the Company views its business as one reportable operating segment to evaluate performance, allocate resources, set operational targets and forecast its future financial results.

NOTE 3— RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2016-02, Leases (Topic 842) , and subsequently issued clarifications and corrections to the update by issuing ASU 2018-10 in July 2018.

This update required lessees to recognize lease assets and lease liabilities on the balance sheet for those leases classified as operating leases under previous authoritative guidance.

For income statement purposes, the new standard retained a dual model similar to Accounting Standards Codification, or ASC, 840, requiring leases to be classified as either operating or financing.

Operating leases continue to result in straight-line expense while financing leases result in a front-loaded expense pattern (similar to previous accounting guidance by lessees for operating and capital leases, respectively, under ASC 840).

The Company adopted ASU 2016-02 on January 1, 2019 using the effective date method.

There were practical expedients available to the Company at transition that it elected to apply upon adoption.

The Company did not re-assess (i) whether its contracts contained a lease under the new definition of a lease and (ii) the classification of those leases.

There were no initial direct costs previously capitalized on the consolidated balance sheet.

In addition, the Company applied hindsight in the determination of the lease terms, in the assessment of the likelihood that a lease renewal, termination or purchase option will be exercised, and in the assessment of any potential impairments that existed on the ROU assets recognized at adoption.

The Company also elected not to recognize a ROU asset and lease liability for those leases with a remaining lease term of 12 months or less.

At adoption on January 1, 2019, the lease liability was equal to the present value of future lease payments and a ROU asset was recorded based on the lease liability, adjusted for items such as prepaid and accrued lease payments.

The Company recorded $ 36.5 million of lease liabilities and $ 27.6 million of ROU assets as of January 1, 2019, the difference representing previously recorded lease-related assets and liabilities.

There was a cumulative-effect adjustment to accumulated deficit of $ 0.2 million upon adoption.

The lease liability recognized upon adoption was based upon the present value of the sum of the remaining minimum lease payments (as previously identified under ASC 840), determined using the discount rate as of the date of adoption.

The discount rate was based on the Company’s incremental borrowing rate on a collateralized basis over a similar remaining term and in a similar economic environment.

Refer to Note 8, Leases , for further information on the Company’s existing leases.

In May 2014, the FASB, issued Accounting Standards Update, or ASU, 2014-09, Revenue from Contracts with Customers.

The Company adopted this standard on January 1, 2018 using the modified retrospective method and recorded a cumulative effect adjustment of $ 1.4 million to accumulated deficit upon adoption—the impact related to the acceleration of $ 1.0 million of deferred revenue and $ 0.4 million of royalties.

Under the modified retrospective method of adoption, the comparative information in the consolidated financial statements was not revised and has been reported under ASC 605.

The implementation of ASC 606 did not have a material impact on the Company’s consolidated statements of operations because the timing of revenue recognition for EXPAREL product sales did not change.

Refer to Note 4, Revenue, for further information on the Company’s revenue.

In January 2016, the FASB issued ASU 2016-01, Financial Instruments- Overall (Subtopic 825-10):

Recognition and Measurement of Financial Assets and Financial Liabilities.

Under this standard, entities have the option to measure equity investments without readily determinable fair values either at fair value or at cost minus impairment, if any, plus or minus changes resulting from observable price changes for identical or similar investments of the same issuer.

ASU 2016-01 became effective for the Company beginning January 1, 2018.

The Company elected to measure its equity investment without a readily

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

determinable fair value (TELA Bio, Inc.) at cost minus impairment.

Refer to Note 2, Summary of Significant Accounting Policies, for further information.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718):

Improvements to Nonemployee Share-Based Payment Accounting , which aligned accounting for share-based payments issued to nonemployees to that of employees under the existing guidance of Topic 718, with certain exceptions.

The Company chose to early adopt ASU 2018-07 in June 2018 and recorded a cumulative effect adjustment of less than $ 0.1 million to accumulated deficit upon adoption.

Recent Accounting Pronouncements Not Adopted as of December 31, 2019

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which required entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts.

In June 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2016-13, Financial Instruments—Credit Losses (Topic 326):

Measurement of Credit Losses on Financial Instruments , which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts.

The Company now includes forward-looking information to better form its credit loss estimates.

This update also required 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 standard is effective for the Company beginning January 1, 2020.

The Company does not believe the adoption of this standard will have a material impact on its consolidated statements of operations, stockholders’ equity or cash flows.

This standard became effective for the Company beginning January 1, 2020 and there were no credit losses recognized upon adoption.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820):

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(i) changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and (ii) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements.

The standard will become effective for the Company beginning January 1, 2020.

The Company will apply these new disclosure requirements in its consolidated financial statements beginning with the three-month period ending March 31, 2020.

The standard became effective for the Company beginning January 1, 2020 and the Company has applied these new disclosure requirements in its consolidated financial statements for the year ended December 31, 2020.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other Internal-Use Software (Subtopic 350-40):

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The update provides guidance to determine which implementation costs to capitalize as they relate to the service contract and which costs to expense.

In addition, the update further defines the term of the hosting arrangement to include the non-cancelable period of the arrangement plus periods covered by (i) an option to extend the arrangement if the customer is reasonably certain to exercise that option;

(ii) an option to terminate the arrangement if the customer is reasonably certain not to exercise the termination option and (iii) an option to extend (or not to terminate) the arrangement in which exercise of the option is in the control of the vendor.

Any expense related to the capitalized implementation costs should be recorded in the same financial statement line item in the consolidated statements of operations as the fees associated with the hosting element of the arrangement, and the payments for capitalized implementation costs should be classified in the same manner as payments made for fees associated with the hosting element in the consolidated statements of cash flows.

This standard is effective for the Company beginning January 1, 2020.

The amendments could be applied either retrospectively or prospectively to all implementation costs incurred after the date of adoption.

The Company has applied this standard prospectively to its implementation costs incurred beginning in 2020.

Any new implementation costs incurred are classified in other assets and the amortization classified in operating expenses, separate from depreciation expense, over the term of the hosting arrangement.

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, which amends the approaches and methodologies in accounting for income taxes during interim periods and makes changes to certain income tax classifications.

The new standard allows exceptions to the use of the incremental approach for intra-period tax allocation, when there is a loss from continuing operations and income or a gain from other items, and to the general methodology for calculating income taxes in an interim period, when a year-to-date loss exceeds the anticipated loss for the year.

The standard also requires franchise or similar taxes partially based on income to be reported as income tax and the effects of enacted changes in tax laws or rates to be included in the annual effective tax rate computation from the date of enactment.

Lastly, in any future acquisition, the Company would be required to evaluate when the step-up in the tax basis of goodwill is part of the business combination and when it should be considered a separate transaction.

The standard will be effective for the Company beginning January 1, 2021, with early adoption of the amendments permitted.

The Company is currently evaluating the impact from the adoption of ASU 2019-12 on its consolidated financial statements.

This standard became effective for the Company beginning January 1, 2020.

The amendments have been applied prospectively to implementation costs incurred after the date of adoption.

The Company did not incur implementation costs in a hosting arrangement that were required to be capitalized during the year ended December 31, 2020.

In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) , which was adopted by the Company on January 1, 2019 using the effective date method.

There were practical expedients available to the Company that it elected to apply upon adoption.

The Company did not re-assess (i) whether its contracts contained a lease under the new definition of a lease and (ii) the classification of those leases.

There were no initial direct costs previously capitalized on the consolidated balance sheet.

The Company also elected not to recognize a ROU asset and lease liability for those leases with a remaining lease term of 12 months or less.

At adoption, the Company recorded $ 36.5 million of lease liabilities and $ 27.6 million of ROU assets as of January 1, 2019, the difference representing previously recorded lease-related assets and liabilities.

There was a cumulative-effect adjustment to accumulated deficit of $ 0.2 million upon adoption.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-15

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

In May 2014, the FASB, issued ASU 2014-09, Revenue from Contracts with Customers .

The implementation of Accounting Standards Codification, or ASC, 606 did not have a material impact on the Company’s consolidated statements of operations because the timing of revenue recognition for EXPAREL product sales did not change.

Refer to Note 4, Revenue , for further information on the Company’s revenue.

In June 2018, the FASB issued ASU 2018-07, Compensation—Stock Compensation (Topic 718):

The Company adopted ASU 2018-07 in June 2018 and recorded a cumulative effect adjustment of less than $0.1 million to accumulated deficit upon adoption.

Recent Accounting Pronouncements Not Adopted as of December 31, 2020

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes , which amends the approaches and methodologies in accounting for income taxes during interim periods and makes changes to certain income tax classifications.

The new standard allows certain exceptions, including an exception to the use of the incremental approach for intra-period tax allocations, when there is a loss from continuing operations and income or a gain from other items, and to the general methodology for calculating income taxes in an interim period, when a year-to-date loss exceeds the anticipated loss for the year.

The standard also requires franchise or similar taxes partially based on income to be reported as income tax and to reflect the effects of enacted changes in tax laws or rates in the annual effective tax rate computation from the date of enactment.

The standard became effective for the Company January 1, 2021 and the Company does not anticipate any material impact to its consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity's Own Equity (Subtopic 815-40), which limits the number of convertible instruments that require separate accounting to (i) those with embedded conversion features that are not clearly and closely related to the debt, that meet the definition of a derivative, and that do not qualify for the scope exception from derivative accounting and (ii) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid in capital.

In addition, the new guidance requires diluted earnings per share calculations to be prepared using the if-converted method, instead of the treasury stock method.

The guidance must be applied in fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, with early adoption permitted no earlier than for fiscal years beginning after December 15, 2020.

The Company has the option to adopt the new guidance using a modified retrospective method of transition, which would then be applied to transactions outstanding at the time of adoption, or the full retrospective method.

The Company is evaluating the impact from the adoption of ASU 2020-06 on its consolidated financial statements.

NOTE 4— REVENUE

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and (iv) license fees and milestone payments.

Previously, the Company sold DepoCyt(e) to third-party licensees in the U.S.

and Europe prior to its discontinuation in June 2017.

To date, there has been no revenue from the sales of EXPAREL or iovera° in the E.U.

The Company does not consider revenue from sources other than sales of EXPAREL to be material sources of its consolidated revenue.

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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 end-users which include hospitals, ambulatory surgery centers and doctors.

The Company sells EXPAREL through a drop-ship program under which orders are processed through wholesalers based on orders of the product placed by end-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.

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EXPAREL revenue is recorded at the time the product is delivered to the end-user.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-16

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Revenues from sales of products are recorded net of returns allowances, prompt payment discounts, wholesaler service fees, volume rebates and chargebacks.

These reserves are based on estimates of the amounts earned or to be claimed on the related sales.

These amounts are treated as variable consideration, estimated and recognized as a reduction of the transaction price at the time of the sale, using the most likely amount method for the gross to net adjustments, except for returns, which is based on the expected value method.

These amounts are treated as variable consideration, estimated and recognized as a reduction of the transaction price at the time of the sale, using the most likely amount method, except for returns, which is based on the expected value method.

The Company includes these estimated amounts in the transaction price to the extent 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.

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The following table provides a summary of activity with respect to the Company’s sales related allowances and accruals related to EXPAREL for the years ended December 31, 2020, 2019 and 2018 (in thousands):

Returns Allowances

Prompt Payment Discounts

Wholesaler Service Fees

Volume Rebates and Chargebacks

Returns Allowances Prompt Payment Discounts Wholesaler Service Fees Volume Rebates and Chargebacks Total

Balance at December 31, 2017 $ 821 $ 657 $ 839 $ 696 $ 3,013

Provision 680 6,802 5,194 6,645 19,321

Payments/Adjustments ( 1,157 ) ( 6,680 ) ( 4,866 ) ( 6,331 ) ( 19,034 )

Balance at December 31, 2018 344 779 1,167 1,010 3,300

Provision 783 8,426 6,267 11,475 26,951

Payments/Adjustments ( 587 ) ( 8,243 ) ( 5,948 ) ( 10,669 ) ( 25,447 )

Balance at December 31, 2019 540 962 1,486 1,816 4,804

Provision 794 8,541 6,437 12,345 28,117

Payments/Adjustments ( 311 ) ( 8,496 ) ( 6,755 ) ( 12,561 ) ( 28,123 )

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Payment terms generally range from zero to 37 days from the date of the transaction, and accordingly, there is no significant financing component.

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Performance Obligations

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The following table represents disaggregated net product sales in the periods presented as follows (in thousands):

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-17

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Year Ended December 31,

2020 2019 2018

Net product sales:

EXPAREL / bupivacaine liposome injectable suspension $ 417,797 $ 411,030 $ 332,427

iovera° 8,817 7,896 —

Total net product sales $ 426,614 $ 418,926 $ 332,427

NOTE 5— MYOSCIENCE ACQUISITION

On April 9, 2019, the Company acquired MyoScience (the “MyoScience Acquisition”), a privately-held medical device company, pursuant to the terms of an Agreement and Plan of Merger (the “Merger Agreement”), under which MyoScience became a wholly-owned subsidiary of the Company and was renamed Pacira CryoTech, Inc., or CryoTech.

The MyoScience Acquisition added iovera° to the Company’s commercial offering.

The iovera° system is a novel, United States Food and Drug Administration, or FDA, approved, non-opioid treatment that immediately alleviates pain for up to 90 days by applying intense cold to only targeted nerves in a process called cryoanalgesia.

The consideration included an initial cash payment of $ 120.0 million , reduced by $ 1.0 million for post-closing purchase price adjustments and indemnification obligations incurred to date, and the initial fair value of contingent consideration in the amount of $ 28.5 million .

The contingent consideration consists of contingent milestone payments up to an aggregate of $ 100.0 million upon the achievement of certain regulatory and commercial milestones, of which up to $ 25.0 million may be payable in shares of the Company’s common stock if achieved in 2020.

Per the terms of the Merger Agreement, the Company’s obligation to make milestone payments is limited to those milestones achieved between January 1, 2019 and December 31, 2023, and are to be paid within 60 days of the end of the fiscal quarter of achievement.

In the third quarter of 2019, the Company met a regulatory milestone which was previously accrued that resulted in a $ 7.0 million cash payment in the fourth quarter of 2019.

In the fourth quarter of 2019, the Company met another regulatory milestone which was previously accrued and will result in a $ 5.0 million cash payment to be made in the first quarter of 2020.

Additionally, in the fourth quarter of 2019, the Company recognized a third regulatory milestone in the amount of $ 10.0 million that will require payment in the second quarter of 2020.

The Company recorded $ 8.9 million in acquisition-related charges in its consolidated statements of operations in 2019 related to this milestone.

This milestone payment can be made in either cash or shares of the Company’s common stock (or a combination thereof), at the election of the former MyoScience shareholders.

The total potential remaining milestone payments available as of December 31, 2019 are $ 73.0 million , which includes the milestone payments to be made in 2020.

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company has accounted for the MyoScience Acquisition using the acquisition method of accounting and, accordingly, has included the assets acquired, liabilities assumed and results of operations in the condensed consolidated financial statements from April 10, 2019 onward, the day following the acquisition date.

The excess of the purchase price over the fair value of identifiable net assets acquired represents goodwill.

This goodwill is primarily attributable to the value of combining iovera° and EXPAREL as a safe and effective non-opioid multimodal regimen for pain management, as well as the synergies of merging operations.

The primary assets and liabilities of the business acquired include developed technology and customer relationship intangible assets, equipment, inventory, receivables, payables and accrued expenses.

Inventory has been recorded at its estimated selling price less costs of distribution and a reasonable profit, and the intangible assets acquired (including developed technology and customer relationships) have been recorded at fair value as determined by the Company’s management with the assistance of a third-party valuation specialist.

The Company subsequently made a tax election that allows the acquired goodwill and intangible assets to be tax deductible.

See Note 16, Income Taxes , for more information.

The total consideration for the MyoScience Acquisition was $ 147.5 million , which consisted of the following (in thousands):

Cash paid, adjusted for working capital items

Fair value of contingent consideration

The following table sets forth the allocation of the MyoScience Acquisition purchase price to the estimated fair value of the net assets acquired at the acquisition date (in thousands):

Amounts Recognized at the Acquisition Date

ASSETS ACQUIRED

Current assets

Non-current assets (other than intangible assets)

Intangible assets (excluding goodwill)

Total assets acquired (excluding goodwill)

LIABILITIES ASSUMED

Current liabilities

Deferred tax liabilities, net

Other non-current liabilities

Total liabilities assumed

Total identifiable net assets acquired

Total consideration transferred

CryoTech results from the acquisition date of April 10, 2019 through December 31, 2019 , which are included in the condensed consolidated statements of operations, are as follows (in thousands):

Classification in Condensed Consolidated Statements of Operations

Acquisition Date Through December 31, 2019

Total revenues

On April 9, 2019, the Company acquired MyoScience (the “MyoScience Acquisition”), a privately-held medical device company, in which MyoScience became a wholly-owned subsidiary of the Company and was renamed Pacira CryoTech, Inc.

The total consideration was $ 147.5 million, which included a cash payment of $ 119.0 million and the fair value of contingent consideration in the amount of $ 28.5 million.

The contingent consideration consisted of contingent milestone payments up to an aggregate of $ 100.0 million upon the achievement of certain regulatory and commercial milestones, of which $ 58.0 million are available as of December 31, 2020.

The Company’s obligation to make milestone payments is limited to those milestones achieved through December 31, 2023, and are to be paid within 60 days of the end of the fiscal quarter of achievement.

During the years ended December 31, 2020 and 2019, the Company made $ 15.0 million and $ 7.0 million of cash payments for the achievement of certain milestones, respectively.

In 2020, the Company recorded an additional charge of $ 9.7 million relating to the achievement of a $ 10.0 million regulatory milestone.

The milestone is payable in the second quarter of 2021.

See Note 12, Financial Instruments , for information on the measurement and amounts recognized in the Company’s consolidated financial statements for contingent consideration.

See Note 21, Commitments and Contingencies , for information on a dispute regarding the achievement of certain milestone payments.

Unaudited Pro Forma Summary of Operations

The following table shows the unaudited pro forma summary of operations for the year ended December 31, 2019 and 2018, as if the MyoScience Acquisition had occurred on January 1, 2018.

This pro forma information does not purport to

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

represent what the Company’s actual results would have been if the acquisition had occurred as of January 1, 2018, and is not indicative of what such results would be expected for any future period (in thousands, except per share amounts):

This pro forma information does not purport to represent what the Company’s actual results would have been and is not indicative of what such results would be expected for any future period (in thousands, except per share amounts):

Year Ended December 31,

Total revenues $ 423,475 $ 342,735

Net loss $ ( 16,200 ) $ ( 25,696 )

Pro forma basic and diluted net loss per share $ ( 0.39 ) $ ( 0.63 )

1 unchanged sentence

The summary pro forma financial information primarily reflects the following pro forma adjustments:

Removal of the acquisition-related transaction fees and costs, including certain stock-based compensation and other compensation expenses related to the acquisition, from the year ended December 31, 2019 ;

• Removal of the acquisition-related transaction fees and costs, including certain stock-based compensation and other compensation expenses related to the acquisition;

• Removal of the income tax benefit resulting from the Company decreasing its existing valuation allowance on deferred tax assets and the income tax expense resulting from a 338(g) election recognized in the year ended December 31, 2019;

3 unchanged sentences

• The addition of amortization expense on the acquired developed technology and customer relationship intangible assets.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-18

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6— INVENTORIES

3 unchanged sentences

Finished goods 21,498 23,870

The Company is required to perform stability testing on select lots of EXPAREL.

In October 2019, a single validation lot of EXPAREL manufactured at the Company’s contract manufacturing site did not meet its required stability specification.

At December 31, 2019, $ 1.3 million was reserved due to this stability investigation.

In December 2019, the Company’s contract manufacturer experienced a media fill failure, which is part of the routine aseptic manufacturing requalification program, and an investigation is underway.

Based on the results of its investigation to date, the Company believes no additional inventory reserves are required related to the media fill failure.

However, depending on the outcome of this investigation, it may be determined that up to $ 4.4 million of inventory may be unsellable.

None of the EXPAREL lots that could be impacted by this media fill failure have been distributed for sale.

The Company has temporarily halted production on the manufacturing line while it investigates the root cause of these failures.

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Total $ 64,650 $ 58,296

In December 2019, the Company’s contract manufacturer experienced a media fill failure, as part of its routine aseptic manufacturing requalification program, and an investigation was completed in April 2020.

Based on the results of the investigation, the Company determined that no inventory reserves were required related to the media fill failure, and that all inventory in question had been determined to be sellable.

The Company resumed production on this manufacturing line in May 2020.

NOTE 7— FIXED ASSETS

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Construction in progress 71,091 38,778

Total 215,048 180,121

accumulated depreciation ( 78,360 ) ( 75,440 )

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Depreciation expense for the years ended December 31, 2020, 2019 and 2018 was $ 12.0 million, $ 14.0 million and $ 13.2 million, respectively.

During the years ended December 31, 2019 , 2018 and 2017 , the Company capitalized interest of less than $0.1 million, $ 0.7 million and $ 1.1 million , respectively.

During the years ended December 31, 2020, 2019 and 2018, the Company capitalized interest of $ 2.4 million, less than $0.1 million and $ 0.7 million, respectively.

As of December 31, 2020 and 2019, total fixed assets, net, includes leasehold improvements and manufacturing process equipment located in Europe in the amount of $ 67.5 million and $ 64.8 million, respectively.

As of December 31, 2020 and 2019, the Company had AROs of $ 2.0 million and $ 2.5 million, respectively, included in accrued expenses and other liabilities on its consolidated balance sheet, for costs associated with returning leased space to its original condition upon the termination of certain lease agreements.

The increase of $ 0.3 million for the year ended December 31, 2019 was due to a revision in estimated future cash flows related to the AROs (including those resulting from the MyoScience Acquisition), including $ 0.2 million of accretion expense.

Accretion expense was $ 0.1 million for the year ended December 31, 2018 .

The decrease of $ 0.5 million for the year ended December 31, 2020 was primarily due to exiting two facilities at the Company’s Science Center Campus in San Diego, California.

Accretion expense was less than $ 0.1 million and $ 0.2 million for the years ended December 31, 2020 and 2019, respectively.

NOTE 8— LEASES

The Company leases all of its facilities, including its EXPAREL manufacturing facility in San Diego, California and its iovera° manufacturing facility in Fremont, California.

These leases have remaining terms between 0.7 years and 10.7 years, some of which provide renewal options at the then-current market value.

The Company also has a lease with Thermo Fisher Scientific Pharma Services, or Thermo Fisher (formerly Patheon UK Limited), for the use of their facility in Swindon, England, which is embedded in agreements the Company has with Thermo Fisher.

These leases have remaining terms up to 9.7 years, some of which provide renewal options at the then-current market value.

The Company also has an embedded lease with Thermo Fisher Scientific Pharma Services, or Thermo Fisher (formerly Patheon UK Limited), for the use of their manufacturing facility in Swindon, England.

A portion of the associated monthly base fees has been allocated to the lease component based on a relative fair value basis.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-19

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 costs are as follows (in thousands):

Year Ended December 31,

Operating Lease Costs 2020 2019 2018

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Variable lease costs 2,096 1,651 1,761

Total $ 12,151 $ 7,876 $ 8,997

Supplemental cash flow information related to operating leases is as follows (in thousands):

December 31, 2019

Year Ended December 31,

Cash paid for operating lease liabilities, net of lease incentive $ 14,347 $ 7,346

Right-of-use assets recorded in exchange for lease obligations $ 42,191 $ 41,605

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company has elected to net the amortization of the ROU asset and the reduction of the lease liability principal in accrued expenses in the condensed consolidated statement of cash flows.

The Company has measured its operating lease liabilities at an estimated discount rate in which it could borrow on a collateralized basis over the remaining term for each operating lease.

The Company has elected to net the amortization of the ROU asset and the reduction of the lease liability principal in other liabilities in the consolidated statement 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 term and the weighted average discount rate are summarized as follows:

December 31, 2019

Weighted average remaining lease term

Weighted average remaining lease term 9.18 years 9.38 years

Weighted average discount rate 6.87 % 7.55 %

Maturities of the Company’s operating lease liabilities are as follows (in thousands):

Aggregate Payments Due

As of December 31, 2020, m aturities of the Company’s operating lease liabilities are as follows (in thousands):

Year Aggregate Payments Due

2021 $ 12,527

2026 through 2030 50,801

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Total operating lease liabilities $ 78,450

The Company has entered into one lease agreement (not included in the table above) for which there are future obligations but the lease has not yet commenced as of December 31, 2019 (in thousands):

Aggregate Payments Due

2025 through 2030

Total future lease payments

As of December 31, 2018, aggregate annual minimum payments due under the Company’s lease obligations were as follows (in thousands):

Aggregate Minimum Payments Due

2024 through 2030

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-20

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9— GOODWILL AND INTANGIBLE ASSETS

In March 2007, the Company acquired from SkyePharma Holding, Inc.

(now a subsidiary of Vectura Group plc), or Skyepharma, its California operating subsidiary named Pacira Pharmaceuticals, Inc.

(the “Skyepharma Acquisition”).

The Company’s goodwill arose in April 2012 from a contingent milestone payment to Skyepharma in connection with the Skyepharma Acquisition.

The Skyepharma Acquisition was accounted for under Statement of Financial Accounting Standards 141, Accounting for Business Combinations , which was the effective GAAP standard at the Skyepharma Acquisition date.

In connection with the Skyepharma Acquisition, the Company agreed to milestone payments for DepoBupivacaine products, including EXPAREL, as follows:

$ 10.0 million upon the first commercial sale in the U.S.

(met April 2012);

$ 4.0 million upon the first commercial sale in the United Kingdom, France, Germany, Italy or Spain;

$ 8.0 million when annual net sales collected reach $ 100.0 million (met September 2014);

$ 8.0 million when annual net sales collected reach $ 250.0 million (met June 2016);

$ 32.0 million when annual net sales collected reach $ 500.0 million .

For purposes of meeting future potential milestone payments, annual net sales are measured on a rolling quarterly basis.

As part of the Skyepharma Acquisition, the Company agreed to pay certain earn-out payments based on a percentage of net sales of DepoBupivacaine products collected, including EXPAREL, for the term during which such sales were covered by a valid claim in certain patent rights related to EXPAREL and other biologics products.

The last patents for which a valid claim existed expired on September 18, 2018 and thus, the only remaining obligations to Skyepharma are the two unmet potential milestone payments totaling $ 36.0 million .

Any remaining milestone payments will be treated as additional costs of the Skyepharma Acquisition and, therefore, recorded as goodwill if and when each contingency is resolved.

There was no change in the carrying value of goodwill related to the Skyepharma Acquisition during the year ended December 31, 2019 .

The Company recorded goodwill related to contingent payments due under the Skyepharma Acquisition during the year ended December 31, 2018 , which is not deductible for income tax purposes.

The Company’s goodwill results from the acquisition of Pacira Pharmaceuticals, Inc.

from SkyePharma Holding, Inc.

(now a subsidiary of Vectura Group plc), or Skyepharma in 2007 (the “Skyepharma Acquisition”), and the MyoScience Acquisition in 2019.

The change in the carrying value of the Company’s goodwill is summarized as follows (in thousands):

1 unchanged sentence

Balance at December 31, 2018 $ 62,040

Percentage payments on collections of net sales of DepoBupivacaine products, including EXPAREL

Balance at December 31, 2018

Goodwill arising from the MyoScience Acquisition 37,507

Balance at December 31, 2019 99,547

MyoScience Acquisition

In connection with the MyoScience Acquisition, the Company recorded goodwill totaling $ 37.5 million .

The Company subsequently made a tax election that allows the acquired goodwill and intangible assets to be tax deductible.

2020 accumulated adjustments —

Balance at December 31, 2020 $ 99,547

In connection with the Skyepharma Acquisition, the Company agreed to certain milestone payments for DepoBupivacaine products, including EXPAREL.

As of December 31, 2020, the remaining milestone payments include:

$ 4.0 million upon the first commercial sale in the United Kingdom, France, Germany, Italy or Spain;

and $ 32.0 million when annual net sales collected reach $ 500.0 million (measured on a rolling quarterly basis).

Any remaining milestone payments will be treated as additional costs of the Skyepharma Acquisition and, therefore, recorded as goodwill if and when each contingency is resolved.

The last patents for which a valid claim existed had expired on September 18, 2018.

The Company made a tax election that allows the acquired goodwill and intangible assets associated with the MyoScience Acquisition to be tax deductible.

Intangible Assets

Intangible assets, net, consist of the developed technology and customer relationships that were acquired in the MyoScience Acquisition and are summarized as follows (in thousands):

December 31, 2019

Gross Carrying Value

Developed technology

Customer relationships

Useful Life December 31,

Developed technology 14 years $ 110,000 $ 110,000

Customer relationships 10 years 90 90

Total intangible assets 110,090 110,090

accumulated amortization ( 13,569 ) ( 5,703 )

Intangible assets, net $ 96,521 $ 104,387

Amortization expense on intangible assets for the years ended December 31, 2020 and 2019 were $ 7.9 million and $ 5.7 million, respectively.

Assuming no changes in the gross carrying amount of these intangible assets, the future amortization expense on these intangible assets will be $ 7.9 million annually through 2032 and $ 2.2 million in 2033.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-21

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

There were no intangible assets, net, at December 31, 2018.

Amortization expense on intangible assets for the year ended December 31, 2019 was $ 5.7 million .

There was no amortization expense on intangible assets for the years ended December 31, 2018 and 2017 .

NOTE 10— ACCRUED EXPENSES

6 unchanged sentences

Accrued interest 2,376 2,048

Product returns, wholesaler service fees and other

Product returns and wholesaler service fees 2,190 2,026

Total $ 70,974 $ 70,427

NOTE 11— DEBT

Convertible Senior Notes Due 2025

On March 13, 2017, the Company completed a private placement of $ 345.0 million in aggregate principal amount of 2.375 % convertible senior notes due 2022, or 2022 Notes, and entered into an indenture, or 2022 Indenture, with respect to the 2022 Notes.

The 2022 Notes accrue interest at a fixed rate of 2.375 % per year, payable semiannually in arrears on April 1 st and October 1 st of each year.

The 2022 Notes mature on April 1, 2022.

On July 10, 2020, the Company completed a private placement of $ 402.5 million in aggregate principal amount of its 0.750 % convertible senior notes due 2025, or 2025 Notes, and entered into an indenture, or 2025 Indenture, with respect to the 2025 Notes.

The 2025 Notes accrue interest at a fixed rate of 0.750 % per year, payable semiannually in arrears on February 1 st and August 1 st of each year, beginning on February 1, 2021.

The 2025 Notes mature on August 1, 2025.

The total debt composition of the 2025 Notes is as follows (in thousands):

3 unchanged sentences

Total debt, net of debt discount and deferred financing costs $ 313,030

Holders may convert the 2022 Notes at any time prior to the close of business on the business day immediately preceding October 1, 2021, only under the following circumstances:

(i) during any calendar quarter commencing after June 30, 2017 (and only during such calendar quarter), if the last reported sale 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 is greater than 130 % of the conversion price on each 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 product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;

The net proceeds from the issuance of the 2025 Notes was approximately $ 390.0 million, after deducting commissions and the offering expenses paid by the Company.

A portion of the net proceeds from the 2025 Notes was used by the Company to repurchase $ 185.0 million in aggregate principal amount of its outstanding 2.375 % convertible senior notes due 2022 in privately-negotiated transactions for a total of $ 211.1 million of cash (including accrued interest).

Holders may convert the 2025 Notes at any time prior to the close of business on the business day immediately preceding February 3, 2025, only under the following circumstances:

(i) during any calendar quarter (and only during such calendar quarter), if the last reported sale 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 is greater than or equal to 130 % of the conversion price on each 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 2025 Indenture) per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the 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;

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-22

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(iv) if the Company calls the 2025 Notes for redemption, until the close of business on the business day immediately preceding the redemption date.

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.

On or after February 3, 2025, until the close of business on the second scheduled trading day immediately preceding August 1, 2025, holders may convert their 2025 Notes at any time.

None of these conditions for conversion were met during the quarter ended December 31, 2020.

Upon conversion, holders will receive the principal amount of their 2025 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 2025 Indenture).

2 unchanged sentences

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 2022 Notes represents a premium of approximately 37.5 % to the closing sale price of $ 48.65 per share of the Company’s common stock on the Nasdaq Global Select Market on March 7, 2017, the date that the Company priced the private offering of the 2022 Notes.

The initial conversion price of the 2025 Notes represents a premium of approximately 32.5 % to the closing sale price of $ 54.17 per share of the Company’s common stock on the Nasdaq Global Select Market on July 7, 2020, the date that the Company priced the private offering of the 2025 Notes.

As of December 31, 2020, the 2025 Notes had a market price of $1,116 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 stock price appreciation.

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 2025 Notes will be paid pursuant to the terms of the 2025 Indenture.

In the event that all of the 2025 Notes are converted, the Company would be required to repay the $ 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 April 1, 2020, the Company may not redeem the 2022 Notes.

On or after April 1, 2020, the Company may redeem for 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, all or part of the 2022 Notes if the last reported sale price (as defined in the 2022 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.

Prior to August 1, 2023, the Company may not redeem the 2025 Notes.

On or after August 1, 2023 (but, in the case of a redemption of less than all of the outstanding 2025 Notes, no later than the 40 th scheduled trading day immediately before the maturity date), the Company may redeem for cash all or part of the 2025 Notes if the last reported sale price (as defined in the 2025 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 days ending on, and including, the trading day immediately before the date the Company sends the related notice of 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 2025 Notes being redeemed, plus (ii) accrued and unpaid interest, including additional interest, if any, to, but excluding, the redemption date.

2 unchanged sentences

If the Company undergoes a fundamental change, as defined in the 2025 Indenture, subject to certain conditions, holders of the 2025 Notes may require the Company to repurchase for cash all or part of their 2025 Notes at a repurchase price equal to 100 % of the principal amount of the 2025 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.

In addition, if a “make-whole fundamental change” (as defined in the 2025 Indenture) occurs prior to August 1, 2025, 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 2025 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 2025 Notes, and equal in right of payment to the Company’s unsecured indebtedness.

The 2025 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 2022 Notes are currently classified on the Company’s consolidated balance sheet at December 31, 2019 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 the Company’s common stock during the prescribed measurement periods.

In the event that the holders of the 2022 Notes have the right 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.

While the 2025 Notes are currently classified on the Company’s consolidated balance sheet at December 31, 2020 as long-term debt, the future convertibility and resulting balance sheet classification of this liability is monitored at each quarterly reporting date and is analyzed dependent upon market prices of the Company’s common stock during the prescribed measurement periods.

In the event that the holders of the 2025 Notes have the election to convert the 2025 Notes at any time during the prescribed measurement period, the 2025 Notes would then be considered a current obligation and classified as such.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-23

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2 unchanged sentences

The initial carrying value of the liability component of $ 314.7 million was calculated using a 5.78 % assumed borrowing rate.

The equity component of $ 87.8 million, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the 2025 Notes and is recorded in additional paid-in capital on the consolidated balance sheet at the issuance date.

The equity component is treated as a discount on the liability component of the 2025 Notes, which is amortized over the five-year term of the 2025 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.

A deferred tax liability was recognized in the amount of $ 20.5 million, with the offsetting amount recorded in additional paid-in capital.

See Note 16, Income Taxes , for information regarding the Company’s deferred taxes.

The Company allocated the total transaction costs of approximately $ 12.5 million related to the issuance of the 2025 Notes to the liability and equity components of the 2025 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 2025 Notes, and transaction costs attributable to the equity component totaling $ 2.7 million are netted with the equity component in stockholders’ equity.

The 2025 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 2025 Indenture contains customary events of default with respect to the 2025 Notes, including that upon certain events of default, 100% of the principal and accrued and unpaid interest on the 2025 Notes will automatically become due and payable.

Convertible Senior Notes Due 2022

The 2022 Notes accrue interest at a fixed rate of 2.375 % per year, payable semiannually in arrears on April 1 st and October 1 st of each year.

The 2022 Notes mature on April 1, 2022.

As discussed above, in July 2020, the Company used part of the net proceeds from the issuance of the 2025 Notes to repurchase $ 185.0 million aggregate principal amount of the 2022 Notes in privately-negotiated transactions for an aggregate of $ 211.1 million in cash (including accrued interest).

The partial repurchase of the 2022 Notes resulted in an $ 8.1 million loss on early extinguishment of debt.

The total debt composition of the 2022 Notes is as follows (in thousands):

2.375 % convertible senior notes due 2022

$ 160,000 $ 345,000

Deferred financing costs ( 1,089 ) ( 4,143 )

Discount on debt ( 9,263 ) ( 34,812 )

Total debt, net of debt discount and deferred financing costs $ 149,648 $ 306,045

Holders may convert their 2022 Notes prior to October 1, 2021, only if certain circumstances are met, including if during the previous calendar quarter, the last reported sales price of the Company’s common stock was greater than or equal to 130 % of the conversion price than applicable for at least 20 out of the last 30 consecutive trading days of the quarter.

During the year ended December 31, 2020, this condition for conversion was not met.

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, 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 2022 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 2022 Notes is 14.9491 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of $ 66.89 per share of the Company’s common stock.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-24

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest.

As of December 31, 2020, the 2022 Notes had a market price of $1,144 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 stock price appreciation.

Upon the receipt of conversion requests, the settlement of the 2022 Notes will be paid pursuant to the terms of the 2022 Indenture.

In the event that all of the 2022 Notes are settled, the Company would be required to repay the remaining $ 160.0 million in principal value and any conversion premium in any combination of cash and shares of its common stock (at the Company’s option).

As of April 1, 2020, the Company may redeem for 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, all or part of the 2022 Notes if the last reported sale price (as defined in the 2022 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.

This condition was not met during the quarter ended December 31, 2020.

The redemption price will equal the sum of (i) 100 % of the principal amount of the 2022 Notes being redeemed, plus (ii) accrued and unpaid interest, including additional interest, if any, to, but excluding, the redemption date.

In addition, calling the 2022 Notes for redemption will constitute a “make-whole fundamental change” (as defined in the 2022 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 2022 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 (trade payables) of the Company’s subsidiaries.

The 2022 Notes are currently classified on the Company’s consolidated balance sheet at December 31, 2020 as short-term debt.

The future convertibility of this liability is monitored at each quarterly reporting date and is analyzed dependent upon market prices of the Company’s common stock during the prescribed measurement periods.

The holders of the 2022 Notes have the right to convert the 2022 Notes at any time on or after October 1, 2021, until the close of business on the second scheduled trading day immediately preceding April 1, 2022.

Therefore, the 2022 Notes are considered a current obligation to the Company.

Under ASC 470-20, Debt with Conversion and Other Options , an entity must separately account for the liability and equity components 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 was recorded in additional paid-in capital on the consolidated balance sheet at the issuance date.

2 unchanged sentences

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.

Transaction costs attributable to the liability

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-25

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 2019

On February 1, 2019, the Company’s 3.25 % convertible senior notes due 2019, or 2019 Notes, matured, and the Company paid the remaining $ 0.3 million of principal in full, plus a $ 0.2 million conversion premium in cash.

The 2019 Notes accrued interest at a fixed rate of 3.25 % per year and were payable semiannually in arrears on February 1 st and August 1 st of each year.

Interest Expense

1 unchanged sentence

Year Ended December 31,

Contractual interest expense

2020 2019 2018

Contractual and other interest expense $ 7,650 $ 8,195 $ 8,205

Amortization of debt issuance costs 2,156 1,707 1,634

Amortization of debt discount 18,254 13,746 12,799

Capitalized interest and other (Note 7)

Capitalized interest (Note 7) ( 2,389 ) ( 20 ) ( 689 )

Total $ 25,671 $ 23,628 $ 21,949

Effective interest rate on convertible senior notes 7.15 % 7.81 % 7.81 %

7 unchanged sentences

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

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unobservable inputs that are used when little or no market data is available.

1 unchanged sentence

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 equity investment is calculated utilizing market quotations from a major American stock exchange (Level 1).

The fair value of the Company’s equity investment with a readily determinable fair value is calculated utilizing market quotations from a major American stock exchange (Level 1).

The fair value of the Company’s convertible senior notes are calculated utilizing market quotations from an over-the-counter trading market for these notes (Level 2).

The fair value of the Company’s acquisition-related contingent consideration is reported at fair value on a recurring basis (Level 3).

The carrying amount of the investment without a readily determinable fair value has not been adjusted for either an impairment or upward or downward adjustments based on observable transactions.

The carrying values and fair values of the Company’s financial assets and liabilities at December 31, 2020 are as follows (in thousands):

Fair Value Measurements Using

Financial Assets:

Equity investment

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-26

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Value Fair Value Measurements Using

Level 1 Level 2 Level 3

Financial Assets and Financial Liabilities Measured at Fair Value on a Recurring Basis:

Financial Asset:

Equity investment with readily determinable fair value $ 11,642 $ 11,642 $ — $ —

Financial Liabilities:

2.375% convertible senior notes due 2022 (1) (2)

Acquisition-related contingent consideration $ 28,346 $ — $ — $ 28,346

(1) The closing price of the Company’s common stock was $ 45.30 per share at December 31, 2019 compared to a conversion price of $ 66.89 per share.

Therefore, at December 31, 2019 , the conversion price was above the stock price.

The maximum conversion premium that can be due on the 2022 Notes is approximately 5.2 million shares of the Company’s common stock, which assumes no increases in the conversion rate for certain corporate events.

(2) Reported at historical cost.

(3) Reported at fair value on a recurring basis.

Financial Liabilities Measured at Amortized Cost:

2.375 % convertible senior notes due 2022 (1)

$ 149,648 $ — $ 183,000 $ —

0.750 % convertible senior notes due 2025 (1)

$ 313,030 $ — $ 449,039 $ —

(1) The closing price of the Company’s common stock as reported on the Nasdaq Global Select Market was $ 59.84 per share at December 31, 2020 compared to a conversion price of $ 66.89 per share for the 2022 Notes and a conversion price of $ 71.78 for the 2025 Notes.

Therefore, at December 31, 2020, the conversion prices were above the stock price.

The maximum conversion premium that could have been due on the 2022 Notes and 2025 Notes at December 31, 2020 was approximately 2.4 million and 5.6 million shares of the Company’s common stock, respectively.

These figures assume no increases in the conversion rate for certain corporate events.

Certain assets and liabilities are measured at fair value on a non-recurring basis, including assets and liabilities acquired in a business combination and long-lived assets, which would be recognized at fair value if deemed impaired or if reclassified as assets held for sale.

The fair value in these instances would be determined using Level 3 inputs.

Financial Liabilities Measured at Fair Value on a Recurring Basis

The Company has recognized contingent consideration related to the MyoScience Acquisition in the amount of $ 38.1 million as of December 31, 2019 .

Refer to Note 5, MyoScience Acquisition , for more information.

The Company has recognized contingent consideration related to the MyoScience Acquisition in the amount of $ 28.3 million and $ 38.1 million as of December 31, 2020 and 2019, respectively.

Refer to Note 5, MyoScience Acquisition and Note 18, Acquisition-Related Charges and Product Discontinuation, Net, for more information.

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.

For the year ended December 31, 2019 , the Company recognized $ 16.7 million of fair value adjustments related to contingent consideration, which have been included in acquisition-related charges in the consolidated statements of operations.

For the years ended December 31, 2020 and 2019, the Company recognized $ 5.2 million and $ 16.7 million of charges, respectively, as a result of revisions to the probabilities of regulatory milestones being met and revisions to future projections, which have been included in acquisition-related charges in the consolidated statements of operations.

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.

1 unchanged sentence

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.

At December 31, 2020, the weighted average discount rate was 4.2 % and the weighted average probability of success for regulatory milestones was 60.8 %.

The following table includes the key assumptions used in the valuation of the Company’s contingent consideration:

Ranges Utilized as of December 31, 2019

Discount rates

7.57% to 7.75%

Probabilities of payment for regulatory milestones

Projected years of payment for regulatory and commercial milestones

The maximum remaining potential payments related to the contingent consideration from the MyoScience Acquisition are $ 73.0 million , including a $ 5.0 million and a $ 10.0 million payment to be made in the first and second quarter of 2020, respectively.

Assumption Ranges Utilized as of December 31, 2020

Discount rates 4.12 % to 4.22 %

Probabilities of payment for regulatory milestones 2.00 % to 100.00 %

Projected years of payment for regulatory and commercial milestones 2021 to 2023

The maximum remaining potential payments related to the contingent consideration from the MyoScience Acquisition are $ 58.0 million as of December 31, 2020.

The change in the Company’s contingent consideration recorded at fair value using Level 3 measurements is as follows (in thousands):

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-27

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The change in the Company’s contingent consideration recorded at fair value using Level 3 measurements is as follows (in thousands):

Consideration

Balance at December 31, 2019 $ 38,142

New financial liabilities entered into on date of MyoScience Acquisition (April 9, 2019)

Fair value adjustments and accretion 5,204

1 unchanged sentence

Balance at December 31, 2020 $ 28,346

Long-term investments consist of asset-backed securities collateralized by credit card receivables and corporate bonds with maturities greater than one year.

Net unrealized gains and losses from the Company’s short-term and long-term investments are reported in other comprehensive income (loss).

Short-term investments consist of asset-backed securities collateralized by credit card receivables, investment grade commercial paper and corporate and government bonds with maturities greater than three months, but less than one year.

Long-term investments consist of asset-backed securities collateralized by credit card receivables and corporate and government bonds with maturities greater than one year 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 December 31, 2020, all of the Company’s short-term and long-term investments are classified as available-for-sale investments and are determined to be Level 2 instruments, which are measured at fair value using standard industry models with observable inputs.

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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.

At December 31, 2019 , all short-term and long-term investments had an “A” or better rating by Standard & Poor’s.

At the time of purchase, all short-term and long-term investments had an “A” or better rating by Standard & Poor’s.

The following summarizes the Company’s investments at December 31, 2020 and 2019 (in thousands):

December 31, 2020 Investments:

Losses Fair Value

Asset-backed securities $ 34,918 $ 98 $ — $ 35,016

1 unchanged sentence

Corporate bonds 120,375 179 ( 11 ) 120,543

Asset-backed securities

Corporate bonds

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Government bonds 44,629 7 ( 2 ) 44,634

Subtotal 421,416 320 ( 31 ) 421,705

Government bonds 95,429 30 — 95,459

Subtotal 95,429 30 — 95,459

Total $ 516,845 $ 350 $ ( 31 ) $ 517,164

December 31, 2019 Investments:

Losses Fair Value

Asset-backed securities $ 43,166 $ 54 $ — $ 43,220

1 unchanged sentence

Corporate bonds 138,012 225 ( 5 ) 138,232

Subtotal 213,428 299 ( 5 ) 213,722

Asset-backed securities 28,064 10 ( 15 ) 28,059

Corporate bonds 36,706 37 ( 4 ) 36,739

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 held for sale.

The fair value in these instances would be determined using Level 3 inputs.

Equity Investment

At December 31, 2019 and 2018, the Company held an equity investment in TELA Bio, Inc., or TELA Bio, in its consolidated balance sheets in the amount of $ 10.0 million and $ 14.1 million , respectively.

During the year ended December 31, 2019, the Company made an additional cash investment of $ 1.6 million in TELA Bio and received a non-cash stock dividend from TELA Bio in the amount of $ 2.5 million .

During the years ended December 31, 2019 and 2018, the Company recorded impairment losses in the amount of $ 5.7 million and $ 0.9 million , respectively, in other, net in its consolidated statements of operations.

The fair value at December 31, 2019 was based on a Level 1 input and the fair value at December 31, 2018 was based on a Level 3 input.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments, long-term investments and accounts receivable.

Subtotal 64,770 47 ( 19 ) 64,798

Total $ 278,198 $ 346 $ ( 24 ) $ 278,520

At December 31, 2020, there were no investments available for sale that were materially less than their amortized cost.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-28

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company elects to recognize its interest receivable separate from its available-for-sale investments.

At December 31, 2020 and December 31, 2019, the interest receivable recognized in prepaid expenses and other current assets was $ 1.6 million and $ 1.4 million, respectively.

Equity Investments

At December 31, 2020 and 2019, the Company held an equity investment in TELA Bio, Inc., or TELA Bio, in its consolidated balance sheets in the amounts of $ 11.6 million and $ 10.0 million, respectively.

During the year ended December 31, 2020, the fair value of this publicly traded investment increased by $ 1.6 million which is recorded in other, net in the consolidated statement of operations.

During the year ended December 31, 2019, the Company made an additional cash investment of $ 1.6 million in TELA Bio and received a non-cash stock dividend in the amount of $ 2.5 million.

During 2019, the Company also recognized an impairment loss of $ 5.7 million in other, net related to its investment in TELA Bio.

The fair values of TELA Bio at December 31, 2020 and 2019 were based on Level 1 inputs.

In 2020, the Company invested $ 1.2 million in GeneQuine Biotherapeutics GmbH, or GeneQuine, a privately held biopharmaceutical company headquartered in Hamburg, Germany.

This investment has no readily determinable fair value and is recorded at cost minus impairment, if any, plus or minus observable price changes of identical or similar investments.

In January 2021, the Company invested an additional $ 1.2 million in GeneQuine as a convertible note.

The Company has the right to make an additional $ 4.9 million investment predicated upon GeneQuine achieving certain prespecified near-term milestones.

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term and long-term 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 December 31, 2019 , three wholesalers accounted for over 10% of the Company’s accounts receivable:

37 % , 29 % and 26 % , respectively.

At December 31, 2018 , three wholesalers accounted for over 10% of the Company’s accounts receivable:

32 % , 32 % and 29 % , respectively.

As of December 31, 2020, three wholesalers each accounted for over 10% of the Company’s accounts receivable at 36 %, 28 % and 23 %.

At December 31, 2019, three wholesalers each accounted for over 10% of the Company’s accounts receivable at 37 %, 29 % and 26 %.

For additional information regarding the Company’s wholesalers, see Note 2 , Summary of Significant Accounting Policies .

EXPAREL revenues are primarily derived from major wholesalers and pharmaceutical companies which generally have significant cash resources.

EXPAREL revenues are primarily derived from major wholesalers 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 doubtful accounts receivable are maintained based on historical payment patterns, aging of accounts receivable and actual write-off history.

As of December 31, 2019 and 2018 , no allowances for doubtful accounts were deemed necessary by the Company on its accounts receivable.

Allowances for credit 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 its write-off history.

As of December 31, 2020 and 2019, the Company did not deem any allowances for credit losses on its accounts receivable necessary.

NOTE 13— STOCKHOLDERS’ EQUITY

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Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-29

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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Gains (Losses)

From Available

For Sale Investments

Balance at December 31, 2017 $ ( 454 )

Other comprehensive income before reclassifications

Net unrealized gain on investments net of tax 174

Amounts reclassified from accumulated other comprehensive income (loss) —

Balance at December 31, 2018 ( 280 )

Other comprehensive income before reclassifications

Net unrealized gain on investments net of tax 602

Amounts reclassified from accumulated other comprehensive income (loss) —

Balance at December 31, 2019 322

Net unrealized loss on investments net of tax ( 3 )

Foreign currency translation adjustments ( 1 )

Amounts reclassified from accumulated other comprehensive income (loss) —

Balance at December 31, 2020 $ 318

NOTE 14— STOCK PLANS

Stock Incentive Plans

The Company’s amended and restated 2011 stock incentive plan, or 2011 Plan, was originally adopted by its board of directors and approved by its stockholders in June 2014 and amended in both June 2016 and June 2019.

The Company’s amended and restated 2011 stock incentive plan, or 2011 Plan, was originally adopted by its board of directors and approved by its stockholders in June 2011 and was amended in June 2014, June 2016 and June 2019.

The June 2019 amendment and approval by the Company’s stockholders increased the number of shares of common stock authorized for issuance as equity awards under the plan by 3,000,000 shares.

The 2011 Plan allows the granting of incentive stock options, non-statutory stock options, restricted stock awards and other stock-based awards.

Since the adoption of the 2011 Plan, any remaining shares available for issuance under a 2007 stock incentive plan, or 2007 Plan, are automatically reallocated to the 2011 Plan.

In April 2014, the Company’s board of directors also adopted the 2014 Inducement Plan.

All of the Company’s stock option grants have an exercise price equal to the closing price of the Company’s common stock on the date of grant, generally have a 10-year contractual term and vest in increments (generally over four years from the date of grant although the Company may occasionally grant options with different vesting terms).

The Company also grants RSUs to employees and non-employee directors.

The Company uses authorized and unissued shares to satisfy its obligations under these plans.

All of the Company’s stock option grants have an exercise price equal to the closing price of the Company’s common stock on the date of grant, generally have a 10-year contractual term and vest in increments (typically over four years from the date of grant, although the Company may occasionally grant options with different vesting terms, including grants made to its non-employee directors).

The Company also grants RSUs to employees and non-employee directors generally vesting in increments over four years from the date of grant except for such grants made to non-employee directors.

The Company uses authorized and unissued shares of its common stock to satisfy its obligations under these plans.

2014 Employee Stock Purchase Plan

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During the year ended December 31, 2020, 61,585 shares were purchased and issued through the ESPP.

The following tables contain information about the Company’s stock incentive plans at December 31, 2020:

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-30

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following tables contain information about the Company’s stock incentive plans at December 31, 2019 :

Stock Incentive Plan

Awards Reserved For Issuance

Awards Available For Grant

Stock Incentive Plan Awards Reserved For Issuance Awards

Issued Awards Available For Grant

2011 Plan 12,931,701 11,569,813 1,361,888

2014 Inducement Plan 175,000 36,576 138,424

Employee Stock Purchase Plan

Shares Reserved

Shares Available

Total 13,106,701 11,606,389 1,500,312

Employee Stock Purchase Plan Shares Reserved

For Purchase Shares

Purchased Shares Available

2014 ESPP 500,000 353,566 146,434

Stock-Based Compensation

Compensation expense for stock options and RSUs is based on the estimated grant date fair value of options recognized over the requisite service period on a straight-line expense attribution method.

Compensation expense for stock options and RSUs is based on the estimated grant date fair value of an award recognized over the requisite service period on a straight-line expense attribution method.

Compensation expense for ESPP share options is based on the estimated grant date fair value of the ESPP shares and the grant date number of shares that can be purchased, which is recognized as expense over the length of an offering period.

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Year Ended December 31,

2020 2019 2018

Cost of goods sold $ 5,589 $ 4,665 $ 4,478

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Selling, general and administrative 29,120 23,871 23,313

Total $ 39,920 $ 33,650 $ 31,725

Stock-based compensation from:

Stock options $ 26,749 $ 23,360 $ 22,643

RSUs 12,266 9,511 8,371

ESPP 905 779 711

Total $ 39,920 $ 33,650 $ 31,725

Related income tax benefit $ 8,578 $ — $ —

The following table summarizes the Company’s stock option activity and related information for the period from December 31, 2017 to December 31, 2020:

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-31

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Exercise Price (Per Share)

Weighted Average

Options Weighted

Exercise Price (Per Share) Weighted Average

Term (Years) Aggregate

Intrinsic Value

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Outstanding at December 31, 2017 4,951,493 $ 43.51 6.91 $ 57,021

Granted 1,994,332 39.35

Exercised ( 332,732 ) 21.55 $ 7,418

Forfeited ( 481,126 ) 42.30

Expired ( 409,149 ) 68.01

Outstanding at December 31, 2018 5,722,818 41.69 7.07 $ 49,166

Granted 1,872,758 42.75

Exercised ( 425,495 ) 19.90 $ 9,441

Forfeited ( 286,779 ) 39.22

Expired ( 176,924 ) 63.33

Outstanding at December 31, 2019 6,706,378 42.80 7.05 $ 50,652

Granted 1,502,803 47.50

Exercised ( 1,428,111 ) 31.67 $ 34,227

Forfeited ( 426,925 ) 42.08

Expired ( 119,027 ) 71.71

Outstanding at December 31, 2020 6,235,118 $ 45.98 6.97 $ 102,955

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Black-Scholes Weighted Average Assumption 2020 2019 2018

Expected dividend yield

Expected dividend yield None None None

Risk-free interest rate 0.22 % - 1.60 %

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2.26 % - 3.05 %

1.68% - 2.42%

Expected volatility 53.5 % 53.9 % 53.3 %

Expected term of options

Expected term of options 5.36 years 5.22 years 5.14 years

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-32

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table summarizes the Company’s RSU activity and related information for the period from December 31, 2017 to December 31, 2020:

of Units Weighted

Average Grant

Date Fair Value (Per Share)

Date Fair Value (Per Share) Aggregate

Intrinsic Value

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Unvested at December 31, 2017 499,546 $ 47.32 $ 22,804

Granted 331,129 38.36

Vested ( 156,450 ) 49.59

Forfeited ( 96,261 ) 43.92

Unvested at December 31, 2018 577,964 42.14 $ 24,864

Granted 305,418 43.56

Vested ( 192,760 ) 45.55

Forfeited ( 59,481 ) 41.22

Unvested at December 31, 2019 631,141 41.87 $ 28,591

Granted 665,476 48.70

Vested ( 239,085 ) 41.91

Forfeited ( 100,079 ) 44.43

Unvested and expected to vest at December 31, 2020 957,453 $ 46.34 $ 57,294

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$ 10.40 - $ 13.15

$10.80 - $13.85

Expected dividend yield

Expected dividend yield None None None

Risk-free interest rate 0.14 % - 1.57 %

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1.53 % - 2.14 %

0.62% - 1.14%

Expected volatility 44.9 % 40.2 % 52.2 %

Expected term of ESPP share options

Expected term of ESPP share options 6 months 6 months 6 months

NOTE 15— NET INCOME (LOSS) PER SHARE

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Because the Company reported a net loss for the years ended December 31, 2019 and 2018, no potentially dilutive securities have been included in the computation of diluted net loss per share for those periods.

As discussed in Note 11, Debt , the Company has the option to pay cash for the aggregate principal amount due upon the conversion of its 2022 Notes.

Since it is the Company’s intent to settle the principal amount of its 2022 Notes in cash, the potentially dilutive effect of such notes on net income (loss) per share is computed under the treasury stock method.

In 2018 and 2019, because it was the Company’s intent to settle the conversion premium of its 2019 Notes in cash (as it did upon maturity on February 1, 2019), there was no potentially dilutive effect on the computation of diluted securities.

As discussed in Note 11, Debt , the Company has the option to pay cash for the aggregate principal amount due upon the conversion of its 2022 Notes and 2025 Notes.

Since it is the Company’s intent to settle the principal amount of its 2022 Notes and 2025 Notes in cash, the potentially dilutive effect of such notes on net income (loss) per share is computed under the treasury stock method.

ASU 2020-06 will require the Company to use the if-converted method upon adoption;

this new accounting pronouncement has not been adopted as of December 31, 2020.

The following table sets forth the computation of basic and diluted net income (loss) per share for the years ended December 31, 2020, 2019 and 2018 (in thousands, except per share amounts):

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-33

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Year Ended December 31,

Weighted average shares of common stock outstanding—basic and diluted

Net loss per share:

Basic and diluted net loss per common share

The following outstanding stock options, RSUs, conversion premiums on the Company’s convertible senior notes and ESPP purchase options are antidilutive in the periods presented (in thousands):

2020 2019 2018

Net income (loss) $ 145,523 $ ( 11,016 ) $ ( 471 )

Weighted average shares of common stock outstanding—basic 42,671 41,513 40,911

Computation of diluted securities:

Dilutive effect of stock options 783 — —

Dilutive effect of RSUs 227 — —

Dilutive effect of ESPP purchase options 1 — —

Weighted average shares of common stock outstanding—diluted 43,682 41,513 40,911

Net income (loss) per share:

Basic net income (loss) per common share $ 3.41 $ ( 0.27 ) $ ( 0.01 )

Diluted net income (loss) per common share $ 3.33 $ ( 0.27 ) $ ( 0.01 )

The following outstanding stock options, RSUs, and ESPP purchase options are antidilutive in the periods presented (in thousands):

Year Ended December 31,

2020 2019 2018

Weighted average number of stock options 4,237 6,404 5,492

Weighted average number of RSUs 99 606 542

Conversion premium on the 2019 Notes

Weighted average ESPP purchase options 16 34 31

Total 4,352 7,044 6,065

NOTE 16— INCOME TAXES

Income (loss) before income taxes and the related tax expense (benefit) is as follows (in thousands):

Income (loss) before income taxes and the related tax (benefit) expense is as follows (in thousands):

Year Ended December 31,

2020 2019 2018

Income (loss) before income taxes:

Total loss before income taxes

Domestic $ 17,000 $ ( 7,026 ) $ 5,169

Foreign 3,089 ( 3,722 ) ( 5,594 )

Total income (loss) before income taxes $ 20,089 $ ( 10,748 ) $ ( 425 )

Current taxes:

Federal $ ( 6 ) $ — $ ( 96 )

State 1,185 2,096 142

Total current taxes $ 1,179 $ 2,096 $ 46

Deferred taxes:

Federal $ ( 99,164 ) $ ( 1,828 ) $ —

State ( 27,449 ) — —

Total deferred taxes $ ( 126,613 ) $ ( 1,828 ) $ —

Total income tax expense

Tax expense for the year ended December 31, 2019 consists primarily of state income taxes in jurisdictions where the availability of carryforward losses are either limited or fully utilized as well as state taxes on the one-time gain from the deemed sale of assets resulting from an IRC section 338(g) tax election made by the Company related to the MyoScience Acquisition.

This was partially offset by a reduction in the Company’s valuation allowance on its deferred tax assets due to the MyoScience Acquisition.

The tax expense for each of the years ended December 31, 2018 and 2017 are principally the result of minimum state taxes.

Total income tax (benefit) expense $ ( 125,434 ) $ 268 $ 46

For the year ended December 31, 2020, the Company had an income tax benefit of $ 125.4 million primarily related to the release of a valuation allowance on its domestic net deferred assets.

The income tax expense for the year ended December 31,

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-34

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

2019 consists primarily of state income taxes in jurisdictions where the availability of carryforward losses are either limited or fully utilized as well as state taxes on the one-time gain from the deemed sale of assets resulting from an IRC section 338(g) tax election made by the Company related to the MyoScience Acquisition.

This was partially offset by a reduction in the Company’s valuation allowance on its deferred tax assets due to the MyoScience Acquisition.

Income tax expense for the year ended December 31, 2018 is principally the result of minimum state taxes.

A reconciliation of income taxes at the U.S.

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Year Ended December 31,

2020 2019 2018

federal statutory rate 21.00 % 21.00 % 21.00 %

State taxes 3.15 % ( 7.33 ) % ( 24.84 ) %

Foreign taxes 3.18 % ( 3.95 ) % ( 92.04 ) %

1 unchanged sentence

Stock-based compensation ( 1.08 ) % ( 10.53 ) % ( 874.29 ) %

Tax credits ( 7.92 ) % 19.93 % 700.35 %

Interest expense — % — % 218.47 %

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Convertible senior notes refinancing ( 5.22 ) % — % — %

Effect of the adoption of ASU 2016-09

Nondeductible expenses 4.55 % ( 13.58 ) % ( 132.96 ) %

Reserves 7.66 % ( 15.41 ) % ( 202.98 ) %

338(g) tax election — % ( 9.61 ) % — %

Other ( 1.84 ) % ( 2.35 ) % ( 6.15 ) %

Effective tax rate ( 624.39 ) % ( 2.49 ) % ( 10.73 ) %

The Company’s effective tax rates of ( 624.39 )%, ( 2.49 )% and ( 10.73 )% for the years ended December 31, 2020, 2019 and 2018, respectively, differed from the expected U.S.

statutory tax rate of 21.0 % for 2019 and 2018 and from 35.0% for 2017.

This difference was primarily driven by pretax losses for which the Company concluded that a majority of its tax benefits are not more-likely-than-not to be realized, resulting in the recording of a full valuation allowance.

statutory tax rate of 21.0 %.

This difference for the year ended December 31, 2020 was primarily due to the release of the domestic valuation allowance of $ 126.6 million as discussed below.

The difference for the years ended December 31, 2019 and 2018 was primarily driven by pretax losses for which the Company concluded that a majority of its tax benefits are not more-likely-than-not to be realized, resulting in the recording of a full valuation allowance.

Deferred taxes reflect the tax effects of the differences between the amounts recorded as assets and liabilities for financial reporting purposes and the comparable amounts recorded for income tax purposes.

A full valuation allowance had been recorded against the Company’s net deferred tax balance as of December 31, 2019 because at that time it was more likely than not that its net deferred tax assets would not be realizable.

At each reporting date, the Company considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets.

During the year ended December 31, 2020, in part because in the current year the Company achieved three years of cumulative pretax income in the U.S.

federal and state tax jurisdictions, and based on its most recent forecasts, the Company determined that there is sufficient positive evidence to conclude that it is more likely than not that additional domestic deferred taxes of $ 126.6 million are realizable and, therefore, reduced the valuation allowance accordingly.

During the year ended December 31, 2020, the Company established a deferred tax liability of $ 20.5 million with an offset to additional paid-in capital resulting from the conversion feature of the 2025 Notes.

The initial difference between the book value of convertible debt issued with a beneficial conversion feature and its tax basis is a temporary difference.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-35

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Significant components of the Company’s deferred tax assets and liabilities at December 31, 2020 and 2019 are as follows (in thousands):

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Stock based compensation 21,862 23,187

Inventory 1,345 1,646

Other 2,138 2,022

Total deferred tax assets 129,530 137,216

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tax NOLs of $ 18.7 million at December 31, 2020.

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The existing federal NOLs will begin expiring in 2026 while the existing state NOLs begin expiring in 2024, if the Company has not used them prior to that time.

The existing federal and state NOLs will begin expiring in 2024, if the Company has not used them prior to that time.

NOLs do not expire.

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At December 31, 2020, $ 61.5 million of these federal net operating losses were available.

The Company estimates that an additional $ 10.3 million will come available each year from 2020 through 2022, $ 3.5 million in 2023, $ 1.4 million in each of 2024 and 2025 and that the remaining $ 35.8 million will expire unused.

The Company estimates that an additional $ 10.3 million will come available in each of 2021 and 2022, $ 3.5 million in 2023 and $ 1.4 million in each of 2024 and 2025.

In addition, California and certain states have previously suspended or limited the use of NOL carryforwards for certain taxable years, and certain states are considering similar future measures.

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These judgments are based on projections of future income, including tax-planning strategies, by individual tax jurisdictions.

In each reporting period, the Company assesses the likelihood that its deferred tax assets will be realized and determines if adjustments to its valuation allowance is appropriate.

The Company had a net increase in its valuation allowance of $ 7.0 million for the year ended December 31, 2019 and a net reduction of $ 1.6 million for the year ended December 31, 2018 .

The current year net increase in the Company’s valuation allowance includes a reduction of $ 1.8 million as a result of the MyoScience Acquisition.

There is significant doubt regarding the Company’s ability to utilize its net deferred tax assets and, therefore, the Company has recorded a full valuation allowance reducing its net deferred tax assets to zero at both December 31, 2019 and 2018 .

In December 2017, new legislation was signed into law reducing the corporate U.S.

tax rate from 35% to 21% for tax years beginning after December 31, 2017, fully repealing the corporate alternative minimum tax and making the NOL carryforward period indefinite for NOLs generated after 2017.

In accordance with ASC Topic 740, deferred tax assets and liabilities are required to be measured at the enacted tax rate expected to apply when temporary differences are to be realized or settled.

As of December 31, 2017, the Company re-measured its deferred tax balances based upon the new 21% tax rate.

This resulted in a reduction of $ 55.7 million in the Company’s deferred tax assets, which was offset by a change in its year-end valuation allowance.

In March 2017, the Company established a deferred tax liability 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 the convertible debt, issued with a beneficial conversion feature, and its tax basis was $ 70.9 million , a temporary difference.

The net effect of the deferred tax liability recorded to additional paid-in capital was zero because the Company has a full valuation allowance against its net deferred tax assets.

In 2019, the Company recorded a reserve of $ 1.7 million related to unrecognized tax benefits, or UTBs, which relates to tax positions taken during the year.

In each reporting period, the Company assesses the likelihood that its deferred tax assets will be realized and determines if adjustments to its valuation allowance are appropriate.

The Company had a net decrease in its valuation allowance of $ 126.6 million and an increase of $ 7.0 million for the years ended December 31, 2020 and December 31, 2019, respectively.

During the year ended December 31, 2020, the Company determined that there is sufficient positive evidence to conclude that it is more likely than not that additional domestic deferred taxes of $ 126.6 million are realizable and, therefore, reduced the valuation allowance accordingly.

The net increase in the Company’s valuation allowance for the year ended December 31, 2019 included a reduction of $ 1.8 million as a result of the MyoScience Acquisition.

In 2020, the Company recorded a reserve of $ 1.5 million related to unrecognized tax benefits, or UTBs, which relate to tax positions taken during the year.

The Company’s UTB liability at December 31, 2020 was $ 6.1 million.

The change in the Company’s UTBs in 2020 is summarized as follows (in thousands):

Unrecognized Tax Benefit

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-36

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Balance at December 31, 2019 $ 4,537

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Therefore, no interest or penalties were recognized in income tax expense for the years ended December 31, 2020, 2019 and 2018.

Due to the Company’s full valuation allowance against deferred tax assets, none of the UTBs, if recognized, would affect the effective income tax rate.

The Company estimates that it is not reasonably possible that within the next twelve months, any of the unrecognized tax benefits will significantly increase or decrease.

The Company is currently subject to audit by the U.S.

Internal Revenue Service, or IRS, for the years 2017 through 2020, and state tax jurisdictions for the years 2016 through 2020.

However, the IRS or states

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

may still examine and adjust an NOL arising from a closed year to the extent it is utilized in a year that remains subject to audit.

However, the IRS or states may still examine and adjust an NOL arising from a closed year to the extent it is utilized in a year that remains subject to audit.

The Company’s previously filed income tax returns are not presently under audit by the IRS or state tax authorities.

NOTE 17— OTHER EMPLOYEE BENEFITS

NOTE 17— EMPLOYEE BENEFIT PLANS

The Company’s 401(k) plan is a deferred salary arrangement under section 401(k) of the IRC.

Under the 401(k) plan, participating U.S.

employees may defer a portion of their pre-tax earnings which are eligible for a discretionary percentage match as defined in the 401(k) plan and determined by the Company’s board of directors.

The Company recognized $ 2.6 million , $ 1.6 million and $ 1.3 million of related compensation expense for the years ended December 31, 2019 , 2018 and 2017 , respectively.

employees may defer a portion of their pre-tax earnings which are eligible for a discretionary percentage match as defined in the 401(k) plan and determined by the Company’s board of directors (up to the maximum amount permitted by the IRC).

The Company recognized $ 2.9 million, $ 2.6 million and $ 1.6 million of related compensation expense for its 401(k) discretionary match for the years ended December 31, 2020, 2019 and 2018, respectively.

Deferred Compensation Plan

In June 2020, the Company’s board of directors adopted the Company’s Deferred Compensation Plan, or DCP.

The Company intends that the DCP constitute, and be construed and administered as, an unfunded plan of deferred compensation within the meaning of the Employee Retirement Income Security Act of 1974, as amended, and the IRC of 1986, as amended, under which eligible participants may elect to defer the receipt of current compensation.

Eligible participants include select management and highly compensated employees of the Company, including the Company’s named executive officers.

Pursuant to the DCP, subject to any minimum and maximum deferral requirements that the administrator of the DCP may establish, participants may elect to defer their base salary and annual incentive awards.

In addition to elective deferrals, the DCP permits the Company to make matching and certain other discretionary contributions to the participants.

The Company recognized $ 0.2 million of related compensation expense for its DCP discretionary match for the year ended December 31, 2020.

NOTE 18— ACQUISITION–RELATED CHARGES AND PRODUCT DISCONTINUATION, NET

MyoScience Acquisition

The Company recognized acquisition-related charges of $ 21.6 million during the year ended December 31, 2019 related to the MyoScience Acquisition.

The acquisition-related charges reflect increases in the fair value of contingent consideration in the amount of $ 16.7 million during the year ended December 31, 2019.

The Company recognized acquisition-related charges of $ 5.4 million and $ 21.6 million during the years ended December 31, 2020 and 2019, respectively, related to the MyoScience Acquisition.

The acquisition-related charges reflect increases in the fair value of contingent consideration in the amount of $ 5.2 million and $ 16.7 million during the years ended December 31, 2020 and 2019, respectively.

See Note 12, Financial Instruments , for information regarding the method and key assumptions used in the fair value measurements of contingent consideration.

In addition, $ 4.2 million of acquisition-related charges, representing advisory costs, including legal, financial, accounting and tax services, were incurred during the year ended December 31, 2019.

The remaining $ 0.7 million incurred during year ended December 31, 2019 represented separation costs, asset write-downs and other restructuring charges.

The Company did not incur any acquisition-related charges in 2018 or 2017.

In addition, $ 0.2 million and $ 4.2 million of other acquisition-related charges for the years ended December 31, 2020 and 2019, which included advisory costs, including legal, financial, accounting and tax services, were incurred during the year ended December 31, 2019.

During the year ended December 31, 2019, the Company incurred $ 0.7 million of separation costs, asset write-downs and other restructuring charges.

The Company did not incur any acquisition-related charges in 2018.

See Note 5, MyoScience Acquisition , for more information.

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In addition, the Company terminated a number of existing distributor agreements that were maintained by MyoScience.

These eliminations resulted in the write-off of demonstration equipment held by former employees and distributors.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-37

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

DepoCyt(e) Discontinuation

The Company recorded charges of $ 0.2 million , $ 1.6 million and $ 5.4 million , in the years ended December 31, 2019, 2018 and 2017, respectively, related to the discontinuation of its DepoCyt(e) manufacturing activities.

Production at the Company’s DepoCyt(e) manufacturing facility ceased in June 2017.

Cash payments related to the lease of the idle DepoCyt(e) manufacturing facility are expected to cease once the lease term expires in August 2020.

The Company recorded a gain of $ 0.2 million during the year ended December 31, 2020, and charges of $ 0.2 million and $ 1.6 million in the years ended December 31, 2019 and 2018, respectively, related to the discontinuation of its DepoCyt(e) manufacturing activities in June 2017 due to persistent technical issues specific to the DepoCyt(e) manufacturing process.

The lease of the idle DepoCyt(e) manufacturing facility expired in August 2020.

In April 2018, the Company received formal notice of the termination of a Supply Agreement and a Distribution Agreement (and all related agreements as subsequently amended) from Mundipharma International Corporation Limited and Mundipharma Medical Company, respectively (collectively, “Mundipharma”).

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Summary of Acquisition-Related Restructuring Activities and DepoCyt(e) Discontinuation Costs

At January 1, 2019, there was a balance sheet reclassification from the lease cost reserves related to the DepoCyt(e) discontinuation to lease liabilities in the amount of $ 1.5 million , recognized as part of the transition to the ASU 2016-02.

See Note 2, Summary of Significant Accounting Policies , for more information.

The Company’s acquisition-related restructuring and DepoCyt(e) discontinuation costs as of December 31, 2019 are summarized below (in thousands):

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Severance and Related Costs

Write-off of Property, Plant & Equipment and Inventory

AROs, Other Restructuring and Discontinuation Costs

The Company’s acquisition-related restructuring activities and DepoCyt(e) discontinuation costs as of December 31, 2020 are summarized below (in thousands):

Severance and Related Costs Lease Costs Write-off of Property, Plant & Equipment and Inventory AROs, Other Restructuring and Discontinuation Costs Total

Balance at December 31, 2017 $ — $ 1,768 $ — $ 309 $ 2,077

1 unchanged sentence

Cash payments made — ( 1,311 ) — ( 91 ) ( 1,402 )

Disposal of property, plant &

equipment and inventory

Balance sheet reclassifications — — — 13 13

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Cash payments made ( 348 ) — — ( 404 ) ( 752 )

Other, including non-cash activity — — ( 193 ) — ( 193 )

Balance sheet reclassifications — ( 1,970 ) — 455 ( 1,515 )

Balance at December 31, 2019 81 — — 558 639

Charges incurred

Charges and other adjustments — — — ( 38 ) ( 38 )

Cash payments made ( 81 ) — — ( 501 ) ( 582 )

Other, including non-cash activity

Balance sheet reclassifications

Balance at December 31, 2020 $ — $ — $ — $ 19 $ 19

NOTE 19— COMMERCIAL PARTNERS AND OTHER AGREEMENTS

Thermo Fisher Scientific Pharma Services (Formerly Patheon UK Limited)

Thermo Fisher Scientific Pharma Services

In April 2014, the Company and Thermo Fisher entered into a Strategic Co-Production Agreement, a Technical Transfer and Service Agreement and a Manufacturing and Supply Agreement to collaborate in the manufacture of EXPAREL.

Under the terms of the Technical Transfer and Service Agreement, Thermo Fisher 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.

The Company contracted to purchase EXPAREL from Thermo Fisher, beginning with FDA approval of the suites, which occurred in May 2018.

The Company contracted to purchase EXPAREL from Thermo Fisher, beginning with FDA approval of the first suite, which occurred in May 2018.

Commercial production began in February 2019.

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Unless earlier terminated by giving notice of up to three years (other than termination by the Company in the event of a material breach by Thermo Fisher), this agreement will expire in May 2028.

DePuy Synthes Sales, Inc.

In January 2017, the Company announced 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 U.S.

DePuy Synthes field representatives, specializing in joint reconstruction, spine, sports medicine, trauma and cranio-maxillofacial (CMF) procedures, 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 is 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 U.S.

DePuy Synthes receives 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, provided that the Company or DePuy Synthes generally may not terminate the

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-38

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Agreement, without cause, within three years of 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, as well as 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.

DePuy Synthes Sales, Inc.

In January 2017, the Company announced a Co-Promotion 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 U.S.

In July 2020, the Company notified DePuy Synthes that the Co-Promotion Agreement would terminate on January 2, 2021.

The Company has estimated termination-related costs of up to $ 9.0 million which have been recorded in selling, general and administrative expense during the year ended December 31, 2020.

Aratana Therapeutics, Inc.

On December 5, 2012, the Company entered into a worldwide license, development and commercialization agreement with Aratana Therapeutics, Inc., a wholly owned subsidiary of Elanco Animal Health, Inc., or Aratana.

In December 2012, the Company entered into a worldwide license, development and commercialization agreement with Aratana Therapeutics, Inc., a wholly owned subsidiary of Elanco Animal Health, Inc., or Aratana.

Under the agreement, the Company granted Aratana an exclusive royalty-bearing license, including the limited right to grant sublicenses, for the development and commercialization of the Company’s bupivacaine liposome injectable suspension product for veterinary use.

Under the agreement, Aratana developed and obtained FDA approval for the use of the product in veterinary surgery to manage postsurgical pain.

In connection with its entry into the license agreement, the Company received a one-time payment of $ 1.0 million .

In December 2013, the Company received a $ 0.5 million milestone payment under the agreement.

In June 2016, the Company recorded $ 1.0 million in milestone revenue for Aratana’s filing of an FDA Administrative New Animal Drug Application, or ANADA, and in August 2016 recorded $ 1.0 million related to the FDA’s approval of the ANADA.

The Company is eligible to receive up to an additional aggregate $ 40.0 million upon the achievement of commercial milestones.

The Company is eligible to receive from Aratana up to an aggregate of $ 40.0 million upon the achievement of commercial milestones.

Aratana is required to pay the Company a tiered double-digit royalty on certain net sales made in the U.S.

If the product is approved by foreign regulatory agencies for sale outside of the U.S., Aratana will be required to pay the Company a tiered double-digit royalty on such net sales.

Royalty rates will be reduced by a certain percentage upon the entry of a generic competitor for animal health indications into a jurisdiction or if Aratana must pay royalties to third parties under certain circumstances.

Royalty rates will be reduced by a certain percentage upon the entry of a generic competitor for animal health indications into certain jurisdictions or if Aratana must pay royalties to third parties under certain circumstances.

Unless terminated earlier pursuant to its terms, the license agreement is effective until July 2033, after which Aratana has the option to extend the agreement for an additional five-year term, subject to certain requirements.

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In June 2018, the Company recognized an upfront payment of $ 3.0 million since collaborative licensing revenue is recognized at the point in time when the license is provided and is not expected to substantively change.

This payment was received in July 2018 and the Company is eligible to receive future milestone payments of up to $ 60.0 million that are triggered by filing for and securing regulatory approval(s) and annual sales in China exceeding certain levels.

The Company is also entitled to tiered royalties as a percentage of net sales.

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Gary Pace, a director of the Company.

The Company recorded no expense under the consulting agreement in the years ended December 31, 2019 , 2018, or 2017.

In connection with the consulting agreement, Dr.

Pace received an option to purchase 20,000 shares of common stock at an exercise price of $ 11.02 per share and an option to purchase 70,000 shares of common stock at an exercise price of $ 16.67 per share.

At December 31, 2019 and 2018 , there was nothing payable to Dr.

No services were provided under the consulting agreement in the years ended December 31, 2020, 2019, or 2018, and as of December 31, 2020 and 2019, there was nothing payable to Dr.

Pace for consulting services.

NOTE 21— COMMITMENTS AND CONTINGENCIES

Legal Proceedings

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 patents, product liability and government investigations.

Except as described below, the Company is not presently a party to any legal proceedings which 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.

In April 2015, the Company 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

Except as described below, the Company is not presently a party to any legal 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.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-39

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

practices related to EXPAREL.

The Company is cooperating with the government’s inquiry.

The Company can make no assurances as to the time or resources that will need to be devoted to this inquiry or the impact, if any, of this inquiry or any proceedings on its business, financial condition, results of operations and cash flows.

In December 2019, the Company reached an agreement in principle with the Department of Justice and more than one state Attorney General’s office (the “Plaintiffs”) on a proposal for a global civil settlement in the amount of $ 3.5 million , subject to accrual of interest on the settlement amount from the date of the agreement in principle, negotiation of a definitive settlement agreement and other contingencies.

As part of the settlement, the Company will admit no wrongdoing and will explicitly deny the Plaintiffs’ allegations.

The Company has been given assurances that, if the parties can agree to negotiation of the settlement, this will conclude the investigation that originated from the U.S.

MyoScience Milestone Litigation

In 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 (the “Delaware Court”) 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 “Merger Agreement”), specifically related to the achievement of certain milestone payments under the 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 Merger Agreement, and breach of the 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 Merger Agreement totaling $ 40.0 million, and attorneys’ fees.

The Company believes that the counterclaim from Fortis is without merit and intends to vigorously defend against all claims.

The Company is unable to predict the outcome of this action at this time.

Department of Justice Inquiry Settlement

In April 2015, the Company received a subpoena from the U.S.

Department of Justice, U.S.

Attorney’s Office for the District of New Jersey pertaining to marketing and promotional practices related to EXPAREL.

In July 2020, the Company formally entered into settlement agreements that resolved all outstanding investigations and claims by the United States Department of Justice, the United States Department of Health and Human Services, various States Attorneys’ General and a private plaintiff.

This agreement concluded a five-year investigation related to the sale and marketing of EXPAREL.

Under the various settlement agreements, the Company paid a global settlement of $ 3.5 million, which was recorded in acquisition-related charges, product discontinuation and other in the consolidated financial statements for the year ended December 31, 2019.

The Company expressly denies all allegations and contentions and has admitted no wrongdoing in connection with the settlement agreements.

The Company has been given assurances that this concludes the investigation that originated from the U.S.

Department of Justice subpoena in April 2015.

This settlement was recorded in acquisition-related charges, product discontinuation and other in the consolidated financial statements for the year ended December 31, 2019 .

Purchase Obligations

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In December 2019, the Company announced positive results for its extended pharmacokinetic and safety study for local analgesia in children aged 6 to 17 undergoing cardiovascular or spine surgeries.

Those positive results will provide the foundation for a supplemental New Drug Application (sNDA).

Those positive results provided the foundation for a supplemental New Drug Application, or sNDA.

The sNDA was accepted by the FDA in August 2020 with a Prescription Drug User Fee Act (PDUFA) action date of March 22, 2021.

Additionally, the Company is in negotiations with the FDA and the European Medicines Agency (EMA) for clarity on other pediatric study obligations.

In addition to the initial $ 19.6 million purchase price for the Skyepharma Acquisition, the Company entered into an earn-out agreement with Skyepharma based on the Company reaching certain revenue milestones following the Skyepharma Acquisition.

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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.

Refer to Note 5, MyoScience Acquisition , for information on potential contingent milestone payments related to the MyoScience Acquisition.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-40

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Refer to Note 5, MyoScience Acquisition , for information on potential contingent milestone payments related to the MyoScience Acquisition.

NOTE 22— SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables present selected quarterly financial data for the years ended December 31, 2020 and 2019.

For periods where the Company reported a net loss, no potentially dilutive securities were included in the computation of diluted net loss per share.

(In thousands, except per share amounts):

For periods where the Company reported a net loss, no potentially dilutive securities were included in the computation of diluted net loss per share (in thousands, except per share amounts):

Three Months Ended

2020 June 30,

2020 September 30,

2020 December 31,

Total revenues $ 105,684 $ 75,505 $ 117,484 $ 130,974

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Basic net income (loss) per common share (1)

$ 0.19 $ ( 0.17 ) $ 3.03 $ 0.33

Diluted net income (loss) per common share (1)

$ 0.19 $ ( 0.17 ) $ 2.94 $ 0.32

Three Months Ended

2019 June 30,

2019 September 30,

2019 December 31,

Total revenues $ 91,313 $ 102,604 $ 104,685 $ 122,424

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Net income (loss) ( 2,771 ) 2,730 ( 6,087 ) ( 4,888 )

Basic and diluted net income (loss) per common share (1)

Basic net income (loss) per common share (1)

$ ( 0.07 ) $ 0.07 $ ( 0.15 ) $ ( 0.12 )

Diluted net income (loss) per common share (1)

$ ( 0.07 ) $ 0.06 $ ( 0.15 ) $ ( 0.12 )

(1) Basic and diluted earnings per share are computed independently for each of the quarters presented.

Therefore, the sum of the quarterly basic and diluted earnings per share amounts may not equal the full-year basic and diluted earnings per share computation.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-41

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 9A. Controls and Procedures