What changed in this filing

/stocks — the workspaceLOADING

Item 1. Financial Statements

2021-05-04 compared with 2020-10-30 · 445 added, 696 removed, 658 unchanged (63% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

ASSETS September 30,

ASSETS March 31,

2021 December 31,

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Deferred tax assets 104,467 106,164

Equity investment and other assets 13,957 10,971

Equity investments and other assets 16,053 14,019

Total assets $ 1,287,549 $ 1,274,513

4 unchanged sentences

Lease liabilities 5,503 7,425

Convertible senior notes 151,647 149,648

Contingent consideration 14,864 14,736

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none issued and outstanding at

September 30, 2020 and December 31, 2019

March 31, 2021 and December 31, 2020

Common stock, par value $ 0.001 ;

1 unchanged sentence

43,957,510 shares issued and

outstanding at September 30, 2020;

outstanding at March 31, 2021;

43,636,929 shares issued and outstanding at December 31, 2020

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Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 4

PACIRA BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

1 unchanged sentence

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Net product sales $ 118,738 $ 104,745

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Amortization of acquired intangible assets 1,967 1,967

Acquisition-related charges (gains) and product

discontinuation, net 692 7,618 ( 1,599 ) 12,266

Acquisition-related loss (gains), product discontinuation and other 1,873 ( 3,708 )

Total operating expenses 99,590 88,590

3 unchanged sentences

Interest expense ( 6,971 ) ( 6,022 )

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

Other, net ( 157 ) ( 4,104 )

Total other expense, net ( 6,713 ) ( 8,537 )

Income (loss) before income taxes 6,150 ( 5,816 ) 7,395 ( 7,207 )

Income tax benefit (expense) 123,969 ( 271 ) 123,613 1,079

Net income (loss) $ 130,119 $ ( 6,087 ) $ 131,008 $ ( 6,128 )

Net income (loss) per share:

Basic net income (loss) per common share $ 3.03 $ ( 0.15 ) $ 3.09 $ ( 0.15 )

Diluted net income (loss) per common share $ 2.94 $ ( 0.15 ) $ 3.02 $ ( 0.15 )

Income before income taxes 12,724 8,557

Income tax expense ( 2,355 ) ( 398 )

Net income $ 10,369 $ 8,159

Net income per share:

Basic net income per common share $ 0.24 $ 0.19

Diluted net income per common share $ 0.23 $ 0.19

Weighted average common shares outstanding:

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Pacira BioSciences, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

| Q1 2021 Form 10-Q | Page 5

PACIRA BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Net income (loss) $ 130,119 $ ( 6,087 ) $ 131,008 $ ( 6,128 )

Net income $ 10,369 $ 8,159

Other comprehensive income (loss):

Net unrealized gain (loss) on investments ( 643 ) ( 53 ) 525 727

Total other comprehensive income (loss) ( 643 ) ( 53 ) 525 727

Comprehensive income (loss) $ 129,476 $ ( 6,140 ) $ 131,533 $ ( 5,401 )

Net unrealized loss on investments, net of tax ( 150 ) ( 1,368 )

Foreign currency translation adjustments 4 —

Total other comprehensive loss ( 146 ) ( 1,368 )

Comprehensive income $ 10,223 $ 6,791

See accompanying condensed notes to consolidated financial statements.

Pacira BioSciences, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

(In thousands)

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Income (Loss)

Shares Amount Total

Balance at June 30, 2020 42,608 $ 43 $ 785,124 $ ( 398,509 ) $ 1,490 $ 388,148

Exercise of stock options 703 — 24,582 — — 24,582

Vested restricted stock units 2 — — — — —

Stock-based compensation — — 10,954 — — 10,954

Retirement of equity component

of 2022 convertible senior notes (Note 9) — — ( 33,089 ) — — ( 33,089 )

Equity component of 2025 convertible

senior notes issued, net of deferred taxes

of $ 20,450 (Note 9)

— — 64,619 — — 64,619

Net unrealized loss on investments — — — — ( 643 ) ( 643 )

Net income — — — 130,119 — 130,119

Balance at September 30, 2020 43,313 $ 43 $ 852,190 $ ( 268,390 ) $ 847 $ 584,690

Common Stock Additional

Capital Accumulated

Deficit Accumulated

Comprehensive

Income (Loss)

Shares Amount Total

Balance at June 30, 2019 41,606 $ 42 $ 729,531 $ ( 388,423 ) $ 500 $ 341,650

Exercise of stock options 92 — 1,408 — — 1,408

Vested restricted stock units 2 — — — — —

Stock-based compensation — — 9,244 — — 9,244

Net unrealized loss on investments — — — — ( 53 ) ( 53 )

Net loss — — — ( 6,087 ) — ( 6,087 )

Balance at September 30, 2019 41,700 $ 42 $ 740,183 $ ( 394,510 ) $ 447 $ 346,162

See accompanying condensed notes to consolidated financial statements.

| Q1 2021 Form 10-Q | Page 6

PACIRA BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2020 AND 2019

FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020

(In thousands)

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Vested restricted stock units 4 — — — — —

Shares issued under employee stock

purchase plan 37 — 1,421 — — 1,421

Stock-based compensation — — 10,110 — — 10,110

Retirement of equity component

of 2022 convertible senior notes (Note 9) — — ( 33,089 ) — — ( 33,089 )

Equity component of 2025 convertible

senior notes issued, net of deferred taxes

of $ 20,450 (Note 9)

— — 64,619 — — 64,619

Net unrealized gain on investments — — — — 525 525

Other comprehensive loss (Note 11) — — — — ( 146 ) ( 146 )

Net income — — — 10,369 — 10,369

Balance at September 30, 2020 43,313 $ 43 $ 852,190 $ ( 268,390 ) $ 847 $ 584,690

Balance at March 31, 2021 43,958 $ 44 $ 894,108 $ ( 243,506 ) $ 172 $ 650,818

Common Stock Additional

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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 (Note 2) — — — ( 156 ) — ( 156 )

Exercise of stock options 208 — 3,455 — — 3,455

Vested restricted stock units 1 — — — — —

Shares issued under employee stock

purchase plan 36 — 1,270 — — 1,270

Stock-based compensation — — 8,847 — — 8,847

Retirement of equity component

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

Net unrealized gain on investments — — — — 727 727

Net loss — — — ( 6,128 ) — ( 6,128 )

Balance at September 30, 2019 41,700 $ 42 $ 740,183 $ ( 394,510 ) $ 447 $ 346,162

Other comprehensive loss (Note 11) — — — — ( 1,368 ) ( 1,368 )

Net income — — — 8,159 — 8,159

Balance at March 31, 2020 42,117 $ 42 $ 766,280 $ ( 391,239 ) $ ( 1,046 ) $ 374,037

See accompanying condensed notes to consolidated financial statements.

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 7

PACIRA BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

Nine Months Ended

September 30,

Three Months Ended

Operating activities:

Net income (loss) $ 131,008 $ ( 6,128 )

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

Reversal of deferred tax valuation allowance ( 124,572 ) —

Net income $ 10,369 $ 8,159

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

Deferred taxes 1,746 —

Depreciation of fixed assets and amortization of intangible assets 4,851 4,821

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Amortization of debt discount 5,657 3,594

Loss on early extinguishment of debt 8,071 —

Loss on disposal and impairment of fixed assets 22 998

(Gain) loss on disposal and impairment of fixed assets ( 11 ) 22

Stock-based compensation 10,110 8,847

Changes in contingent consideration (after MyoScience, Inc.

acquisition) ( 1,560 ) 7,327

(Gain) loss on investment and other non-operating income, net ( 2,779 ) 3,957

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

acquisition):

Changes in contingent consideration ( 1,127 ) ( 3,874 )

Loss on investment and other non-operating income, net 155 3,971

Changes in operating assets and liabilities:

Accounts receivable, net 462 8,542

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Investing activities:

Acquisition of MyoScience, Inc.

(net of cash acquired) — ( 118,683 )

Purchases of fixed assets ( 13,073 ) ( 6,724 )

Purchases of investments ( 326,664 ) ( 220,091 )

Sales of investments 154,767 248,365

Equity investment — ( 1,622 )

Purchases of available for sale investments ( 186,653 ) ( 72,610 )

Sales of available for sale investments 145,282 50,768

Debt investments ( 1,220 ) —

Net cash used in investing activities ( 55,664 ) ( 28,566 )

1 unchanged sentence

Proceeds from exercises of stock options 10,325 3,455

Proceeds from shares issued under employee stock purchase plan 1,421 1,270

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 the 2019 convertible senior notes — ( 233 )

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

Payment of contingent consideration to MyoScience, Inc.

securityholders — ( 4,736 )

Net cash provided by financing activities 211,941 5,690

Net increase (decrease) in cash and cash equivalents 47,016 ( 47,387 )

Net cash provided by (used in) financing activities 10,325 ( 1,281 )

Net decrease in cash and cash equivalents ( 33,258 ) ( 23,639 )

Cash and cash equivalents, beginning of period 99,957 78,228

Cash and cash equivalents, end of period $ 66,699 $ 54,589

See accompanying condensed notes to consolidated financial statements.

PACIRA BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

Nine Months Ended

September 30,

Supplemental cash flow information:

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Non-cash investing and financing activities:

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

Net increase in accrued fixed assets $ 6,423 $ 1,663

Fixed assets included in accounts payable and accrued liabilities $ 7,033 $ 2,595

See accompanying condensed notes to consolidated financial statements.

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 8

PACIRA BIOSCIENCES, INC.

CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

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Pacira BioSciences, Inc.

and its subsidiaries (collectively, the “Company” or “Pacira”) is the leading provider of non-opioid pain management 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.

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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.

For information on the Company’s risks related to the ongoing worldwide novel coronavirus (COVID-19) pandemic, see Part II, Item 1A.

“Risk Factors”, included in this Quarterly Report on Form 10-Q.

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.

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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 surgery 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.

During 2020 and thus far in 2021, 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, while many restrictions have since eased as COVID-19 vaccines become more widely available and administered to the general public, the Company still does not know how long it will take the elective surgical market to normalize, or if restrictions on elective surgical procedures will recur.

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

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Therefore, these interim condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 .

The condensed consolidated financial statements at September 30, 2020, and for the three and nine-month periods ended September 30, 2020 and 2019, are unaudited, but include all adjustments (consisting of only normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the financial information set forth herein in accordance with GAAP.

The condensed consolidated financial statements at March 31, 2021, and for the three-month periods ended March 31, 2021 and 2020, are unaudited, but include all adjustments (consisting of only normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the financial information set forth herein in accordance with GAAP.

The condensed consolidated balance sheet at December 31, 2020 is derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020.

The condensed consolidated financial statements as presented reflect certain reclassifications from previously issued financial

statements to conform to the current year presentation.

The condensed consolidated financial statements as presented reflect certain reclassifications from previously issued financial statements to conform to the

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 9

current year presentation.

The accounts of wholly-owned subsidiaries are included in the condensed consolidated financial statements.

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Largest wholesaler 32 % 32 %

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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) , which was adopted by the Company on January 1, 2019 using the effective date method.

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

There was a cumulative-effect adjustment to retained earnings of $ 0.2 million upon adoption.

In June 2016, the FASB issued 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 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):

Disclosure Framework .

The update added the following disclosures:

(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 became effective for the Company beginning January 1, 2020 and the Company has applied these new disclosure requirements in its condensed consolidated financial statements as of and for the three and nine months ended September 30, 2020.

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

Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract , which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software.

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

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 became effective for the Company beginning January 1, 2020.

The amendments are to be applied prospectively to all implementation costs incurred

after the date of adoption.

The Company did not incur any implementation costs in a hosting arrangement during the three and nine months ended September 30, 2020.

Recent Accounting Pronouncements Not Adopted as of September 30, 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.

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

The new standard now allows for 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.

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

The standard became effective for the Company beginning January 1, 2021, and there were no material impacts to the consolidated financial statements upon adoption.

Recent Accounting Pronouncements Not Adopted as of March 31, 2021

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 EPS 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.

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.

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.

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 10

NOTE 3— REVENUE

Revenue from Contracts with Customers

The Company’s sources of revenue include (i) sales of EXPAREL in the U.S.;

The Company’s sources of revenue include (i) sales of EXPAREL in the United States, or U.S.;

(ii) sales of iovera° in the U.S.;

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and (iv) license fees and milestone payments.

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

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

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

As such, the following disclosure only relates to revenue associated with net EXPAREL product sales.

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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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Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Accounting Standards Codification (ASC) 606.

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Accounting Standards Codification, or ASC, 606.

A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

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

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 11

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Net product sales:

2 unchanged sentences

Total net product sales $ 118,738 $ 104,745

NOTE 4— 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, under 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 net 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 September 30, 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 nine months ended September 30, 2020, the Company made $ 15.0 million of cash payments for the achievement of two regulatory milestones.

See Note 10, Financial Instruments , for information on the measurement and amounts recognized in the Company’s condensed consolidated financial statements for contingent consideration.

See Note 16, 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 nine months ended September 30, 2019 as if the MyoScience Acquisition had occurred on January 1, 2019.

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):

Nine Months Ended

September 30, 2019

Total revenues $ 301,051

Net loss $ ( 10,633 )

Pro forma basic and diluted net loss per share $ ( 0.26 )

The unaudited pro forma financial information was prepared using the acquisition method of accounting and was based on the historical financial information of the Company and MyoScience.

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;

• Removal of the income tax benefit resulting from the Company decreasing its existing valuation allowance;

• Removal of MyoScience’s loss on extinguishment of debt and warrant expense;

• Removal of MyoScience’s interest expense;

• Adjustments to the Company’s interest income for the cash used to acquire MyoScience;

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

NOTE 4— INVENTORIES

The components of inventories, net are as follows (in thousands):

September 30, December 31,

March 31, December 31,

Raw materials $ 31,697 $ 26,886

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Total $ 64,606 $ 64,650

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 are required related to the media fill failure, and that all inventory in question has been determined to be sellable.

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

NOTE 5— FIXED ASSETS

Fixed assets, net, summarized by major category, consist of the following (in thousands):

September 30, December 31,

March 31, December 31,

Machinery and equipment $ 76,732 $ 74,966

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Fixed assets, net $ 144,822 $ 136,688

For the three months ended September 30, 2020 and 2019, depreciation expense was $ 3.1 million and $ 3.6 million, respectively.

For the three months ended September 30, 2020 and 2019, there was $ 0.7 million and less than $ 0.1 million of capitalized interest on the construction of manufacturing sites, respectively.

For the nine months ended September 30, 2020 and 2019, depreciation expense was $ 8.9 million and $ 10.7 million, respectively.

For the nine months ended September 30, 2020 and 2019, there was $ 1.5 million and less than $ 0.1 million of capitalized interest on the construction of manufacturing sites, respectively.

At September 30, 2020 and December 31, 2019, total fixed assets, net, includes leasehold improvements and manufacturing process equipment located in Europe in the amount of $ 66.8 million and $ 64.8 million, respectively.

During the nine months ended September 30, 2020, the Company established an asset retirement obligation of $ 0.2 million related to a new building lease which contains manufacturing, research and development and office space at its Science Center Campus in San Diego, California.

For both the three months ended March 31, 2021 and 2020, depreciation expense was $ 2.9 million.

For the three months ended March 31, 2021 and 2020, there was $ 1.0 million and less than $ 0.1 million of capitalized interest on the construction of manufacturing sites, respectively.

At March 31, 2021 and December 31, 2020, total fixed assets, net includes leasehold improvements and manufacturing process equipment located in Europe in the amount of $ 67.8 million and $ 67.5 million, respectively.

As of both March 31, 2021 and December 31, 2020, the Company had asset retirement obligations of $ 2.0 million, which are included in accrued expenses and other liabilities on its condensed consolidated balance sheet, for costs associated with returning leased spaces to their original condition upon the termination of certain lease agreements.

NOTE 6— LEASES

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These leases have remaining terms up to 9.4 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 manufacturing facility in Swindon, England, which is embedded in agreements the Company has with Thermo Fisher.

The Company also has an embedded lease with Thermo Fisher Scientific Pharma Services, 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.

| Q1 2021 Form 10-Q | Page 12

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):

Three Months Ended Nine Months Ended

September 30, September 30,

Operating Lease Costs 2020 2019 2020 2019

Three Months Ended

Fixed lease costs $ 2,922 $ 1,564

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

Nine Months Ended

September 30,

Cash paid for lease ROU assets and liabilities $ 11,251 $ 5,247

ROU assets recorded in exchange for lease obligations $ 42,101 $ 38,419

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.

Three Months Ended

Cash paid for operating lease liabilities, net of lease incentive $ 4,600 $ 2,759

Right-of-use assets recorded in exchange for lease obligations $ — $ 174

The Company has elected to net the amortization of the right-of-use asset and the reduction of the lease liability principal in other liabilities in the condensed consolidated 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:

September 30, 2020

Weighted average remaining lease term 9.39 years

Weighted average remaining lease term 8.95 years 9.23 years

Weighted average discount rate 6.89 % 7.55 %

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Year Aggregate Minimum Payments Due

2020 (remaining three months) $ 4,501

2021 (remaining nine months) $ 8,059

2026 through 2031 50,802

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NOTE 7— GOODWILL AND INTANGIBLE ASSETS

There was no change in the carrying value of the Company’s goodwill during the three and nine months ended September 30, 2020.

The balance at both September 30, 2020 and December 31, 2019 was $ 99.5 million.

Skyepharma Acquisition

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 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.

As of September 30, 2020, the Company has recorded $ 62.0 million of goodwill related to the Skyepharma Acquisition.

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

The milestone payments are as follows:

(i) $ 10.0 million upon the first commercial sale in the United States (met April 2012);

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

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

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

(v) $ 32.0 million when annual net sales collected reach $ 500.0 million.

The two unmet milestone payments totaling $ 36.0 million are the only remaining obligations to Skyepharma.

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

(the Company’s California operating subsidiary) from SkyePharma Holding, Inc.

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

(the “MyoScience Acquisition”) in April 2019.

There was no change in the carrying value of the Company’s goodwill during the three months ended March 31, 2021.

The balance at both March 31, 2021 and December 31, 2020 was $ 99.5 million.

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 13

The Skyepharma Acquisition occurred in March 2007, prior to the requirements to record contingent consideration at fair value under ASC 805-30.

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

As of March 31, 2021, 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.

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

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.

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

MyoScience Acquisition

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):

September 30, 2020 Gross Carrying Value Accumulated

Amortization Intangible

Assets, Net Estimated

Developed technology $ 110,000 $ ( 11,590 ) $ 98,410 14 years

Customer relationships 90 ( 13 ) 77 10 years

Total intangible assets $ 110,090 $ ( 11,603 ) $ 98,487

December 31, 2019 Gross Carrying Value Accumulated

Amortization Intangible

Assets, Net Estimated

Useful Life March 31, December 31,

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

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Total intangible assets 110,090 110,090

Amortization expense on intangible assets for the three and nine months ended September 30, 2020 was $ 2.0 million and $ 5.9 million, respectively.

There was $ 2.0 million and $ 3.7 million of amortization expense on intangible assets for the three and nine months ended September 30, 2019, respectively.

Assuming no changes in the gross carrying amount of these intangible assets, amortization expense on intangible assets will be $ 2.0 million for the remaining three months of 2020 and the future amortization expense on intangible assets will be $ 7.9 million annually through 2032 and $ 2.2 million in 2033.

accumulated amortization ( 15,536 ) ( 13,569 )

Intangible assets, net $ 94,554 $ 96,521

Amortization expense on intangible assets for both the three months ended March 31, 2021 and 2020 was $ 2.0 million.

Assuming no changes in the gross carrying amount of these intangible assets, amortization expense will be $ 5.9 million for the remaining nine months of 2021, $ 7.9 million annually through 2032 and $ 2.2 million in 2033.

Convertible Senior Notes Due 2025

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.

In July 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.

The 2025 Notes mature on August 1, 2025.

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

September 30, December 31,

March 31, December 31,

0.750 % convertible senior notes due 2025

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Total debt, net of debt discount and deferred financing costs $ 317,338 $ 313,030

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

A portion of the net proceeds from the 2025 Notes were 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).

The net proceeds from the issuance of the 2025 Notes were 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 commencing after the calendar quarter ending on September 30, 2020 (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;

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 14

(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;

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

During the quarter ended September 30, 2020, none of these conditions for conversion were met.

During the quarter ended March 31, 2021, none of these conditions for conversion were met.

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.

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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 September 30, 2020, the 2025 Notes had a market price o f $ 1,096 pe r $ 1,000 principal amount.

As of March 31, 2021, the 2025 Notes had a market price o f $1,200 pe r $1,000 principal amount.

In the event of conversion, holders would forgo all future interest payments, any unpaid accrued interest and the possibility of further stock price appreciation.

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No sinking fund is provided for the 2025 Notes.

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.

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 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.

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 15

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 2025 Notes are currently classified on the Company’s consolidated balance sheet at September 30, 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.

While the 2025 Notes are currently classified on the Company’s consolidated balance sheet at March 31, 2021 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.

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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 co ntinues to meet the conditions for equity classification.

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 14 , 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.

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Convertible Senior Notes Due 2022

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.

In March 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.

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

September 30, December 31,

March 31, December 31,

2.375 % convertible senior notes due 2022

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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 then applicable for at least 20 out of the last 30 consecutive trading days of the quarter.

During the quarter ended September 30, 2020, this condition for conversion was not met.

During the quarter ended March 31, 2021, this condition for conversion was not met.

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 16

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.

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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.

As of September 30, 2020, the 2022 Notes had a market price of $ 1,149 per $ 1,000 principal amount.

As of March 31, 2021, the 2022 Notes had a market price of $1,216 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.

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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 September 30, 2020.

This condition was not met during the quarter ended March 31, 2021.

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.

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No sinking fund is provided for the 2022 Notes.

While the 2022 Notes are currently classified on the Company’s consolidated balance sheet at September 30, 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 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.

Interest Expense

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Contractual interest expense $ 1,705 $ 2,049

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The three levels of fair value measurements are:

• Level 1—Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities.

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 17

Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities.

The fair value hierarchy gives the highest priority to Level 1 inputs.

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

• Level 3—Unobservable inputs that are used when little or no market data is available.

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

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

The fair value hierarchy gives the lowest priority to Level 3 inputs.

The carrying value of financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximate their respective fair values due to the short-term nature of these items.

The fair value of the Company’s 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 values and fair values of the Company’s financial assets and liabilities at September 30, 2020 are as follows (in thousands):

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.

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.

At March 31, 2021, the carrying values and fair values of the following financial assets and liabilities was as follows (in thousands):

Carrying 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 Assets:

Equity investment (3)

$ 12,803 $ 12,803 $ — $ —

Equity investment with readily determinable fair value $ 11,533 $ 11,533 $ — $ —

Note receivable $ 1,174 $ — $ — $ 1,174

Financial Liabilities:

Acquisition-related contingent consideration $ 27,219 $ — $ — $ 27,219

Financial Liabilities Measured at Amortized Cost:

2.375 % convertible senior notes due 2022 (1)

$ 151,647 $ — $ 194,500 $ —

$ — $ 183,800 $ —

0.750 % convertible senior notes due 2025 (1)

$ 317,338 $ — $ 483,000 $ —

$ — $ 441,241 $ —

Acquisition-related contingent consideration (3)

$ 21,582 $ — $ — $ 21,582

(1) The closing price of the Company’s common stock as reported on the Nasdaq Global Select Market was $ 60.12 per share on September 30, 2020 compared to a conversion price of $ 66.89 per share for the 2022 Notes and $ 71.78 per share for the 2025 Notes.

Therefore, at September 30, 2020, the conversion price was above the stock price.

The maximum conversion premium that could have been due on the 2022 Notes and 2025 Notes at September 30, 2020 was approximately 2.4 million and 5.6 million shares, respectively, of the Company’s common stock.

(1) The closing price of the Company’s common stock as reported on the Nasdaq Global Select Market was $ 70.09 per share on March 31, 2021, compared to a conversion price of $ 66.89 per share for the 2022 Notes and $ 71.78 per share for the 2025 Notes.

The maximum conversion premium that could have been due on the 2022 Notes and 2025 Notes at March 31, 2021 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.

(2) Reported at historical cost.

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

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 $ 21.6 million as of September 30, 2020.

Refer to Note 4, MyoScience Acquisition and Note 15, Acquisition-Related Charges and Product Discontinuation, Net , for more information.

Equity and Debt Investments

At March 31, 2021 and December 31, 2020, the Company held an equity investment in TELA Bio, Inc., or TELA Bio, in its condensed consolidated balance sheets in the amounts of $ 11.5 million and $ 11.6 million, respectively.

For the three months ended March 31, 2021 and 2020, the fair value of this publicly traded investment decreased by $ 0.1 million and $ 4.0 million, respectively, which was recorded in other, net in the condensed consolidated statement of operations.

The fair values of TELA Bio at March 31, 2021 and December 31, 2020 were based on Level 1 inputs.

At March 31, 2021 and December 31, 2020, the Company held an equity investment of $ 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 purchased a convertible note from GeneQuine in the amount of $ 1.2 million.

There were no adjustments recognized in the GeneQuine investments during the three months ended March 31, 2021.The Company has the right to make additional investments in both equity and debt securities of $ 4.7 million predicated upon GeneQuine achieving certain prespecified near-term milestones.

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 18

Acquisition-related Contingent Consideration

In April 2019, the Company completed the MyoScience Acquisition pursuant to the terms of an Agreement and Plan of Merger, which provided for contingent milestone payments of up to an aggregate of $ 100.0 million upon the achievement of certain regulatory and commercial milestones.

As of March 31, 2021, the maximum potential remaining milestone payments are $ 58.0 million.

The Company made no milestone payments during the three months ended March 31, 2021.

In the three months ended March 31, 2020, the Company made a $ 5.0 million cash payment for the achievement of one regulatory milestone.

A regulatory milestone in the amount of $ 10.0 million is payable during the second quarter of 2021.

As of March 31, 2021 and December 31, 2020, the Company has recognized contingent consideration related to the MyoScience Acquisition in the amounts of $ 27.2 million and $ 28.3 million, respectively.

The Company’s contingent consideration obligations are recorded at their estimated fair values and are revalued each reporting period if and until the related contingencies are resolved.

The Company has, in the three and nine month periods ended September 30, 2020, recognized $ 0.8 million of charges and $ 1.6 million of gains, respectively, related to contingent consideration as a result of revisions to the probabilities of regulatory milestones being met, which have been included in acquisition-related charges (gains) in the condensed 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.

These inputs include, as applicable, estimated probabilities and the timing of achieving specified commercial and regulatory milestones, estimated forecasts of revenue and costs and discount rates used to calculate the present value of estimated future payments.

In the three month periods ended March 31, 2021 and 2020, the Company recognized $ 1.1 million and $ 3.9 million of gains, respectively, which have been included in acquisition-related gains in the condensed 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.

These inputs include, as applicable, estimated probabilities and the timing of achieving specified commercial and regulatory milestones, estimated forecasts of revenue and costs and the discount rate used to calculate the present value of estimated future payments.

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 September 30, 2020, the weighted average discount rate was 6.09 % and the weighted average probability of success for regulatory milestones was 25.2 %.

There were $ 7.3 million in changes in the fair value of contingent consideration in the three and nine months ended September 30, 2019.

At March 31, 2021, the weighted average discount rate was 3.66 % and the weighted average probability of success for regulatory milestones that have not yet been met was 34.7 %.

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

Assumption Ranges Utilized as of September 30, 2020

Assumption Ranges Utilized as of March 31, 2021

Discount rates 3.50 % to 3.82 %

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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 September 30, 2020.

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

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Payments made —

Balance at September 30, 2020 $ 21,582

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

Balance at March 31, 2021 $ 27,219

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 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 September 30, 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.

At March 31, 2021, 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.

The fair value of the commercial paper is measured based on a standard industry model that uses the three-month U.S.

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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 September 30, 2020 and December 31, 2019 (in thousands):

September 30, 2020 Investments Cost Gross

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 19

The following summarizes the Company’s investments at March 31, 2021 and December 31, 2020 (in thousands):

March 31, 2021 Investments Cost Gross

Losses Fair Value

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Corporate bonds 89,350 52 ( 23 ) 89,379

Treasury notes 52,642 2 ( 2 ) 52,642

Government bonds 100,851 35 — 100,886

Subtotal 523,260 137 ( 33 ) 523,364

Treasury notes 44,059 6 ( 3 ) 44,062

Asset-backed securities 3,469 — ( 2 ) 3,467

Government bonds 31,486 18 — 31,504

Subtotal 34,955 18 ( 2 ) 34,971

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

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

Subtotal 421,416 320 ( 31 ) 421,705

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

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

Government bonds 95,429 30 — 95,459

Subtotal 95,429 30 — 95,459

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

At September 30, 2020, there were no investments held for sale that were materially less than their amortized cost.

At March 31, 2021, there were no investments available for sale that were materially less than their amortized cost.

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

At September 30, 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 Investment

At September 30, 2020 and December 31, 2019, the Company held an equity investment in TELA Bio, Inc., or TELA Bio, in its condensed consolidated balance sheets in the amount of $ 12.8 million and $ 10.0 million, respectively.

The Company records its investment in TELA Bio at fair value based on a quoted market price based on Level 1 inputs, which resulted in an unrealized gain in the amount of $ 2.8 million during both the three and nine months ended September 30, 2020, which are recorded in other, net income (expense) in the condensed consolidated statements of operations.

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.

At March 31, 2021 and December 31, 2020, the interest receivable recognized in prepaid expenses and other current assets was $ 0.8 million and $ 1.6 million, respectively.

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 September 30, 2020, three wholesalers each accounted for over 10% of the Company’s accounts receivable, at 33 %, 28 % and 27 %.

As of March 31, 2021, three wholesalers each accounted for over 10% of the Company’s accounts receivable, at 35 %, 27 % and 26 %.

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

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 that generally have significant cash resources.

The Company performs ongoing credit evaluations of its customers as

warranted and generally does not require collateral.

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 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 September 30, 2020 and December 31, 2019, the Company did no t deem any allowances for credit losses on its accounts receivable necessary.

As of March 31, 2021 and December 31, 2020, the Company did no t deem any allowances for credit losses on its accounts receivable necessary.

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 20

NOTE 10— STOCK PLANS

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Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Cost of goods sold $ 1,452 $ 1,219

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Equity Awards

The following tables contain information about the Company’s stock option and restricted stock unit, or RSU, activity for the nine months ended September 30, 2020:

The following tables contain information about the Company’s stock option and restricted stock unit, or RSU, activity for the three months ended March 31, 2021:

Stock Options Number of Options Weighted Average Exercise Price (Per Share)

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Expired ( 6,616 ) 71.11

Outstanding at September 30, 2020 6,598,975 45.56

Outstanding at March 31, 2021 5,858,478 46.76

Restricted Stock Units Number of Units Weighted Average Grant Date Fair Value (Per Share)

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Forfeited ( 35,767 ) 47.89

Unvested at September 30, 2020 936,299 45.92

The weighted average fair value of stock options granted during the nine months ended September 30, 2020 wa s $ 22.30 per share.

Unvested at March 31, 2021 940,864 46.85

The weighted average fair value of stock options granted during the three months ended March 31, 2021 wa s $ 30.86 per share.

The fair values of stock options granted were estimated using the Black-Scholes option valuation model with the following weighted average assumptions:

Black-Scholes Weighted Average Assumption Nine Months Ended September 30, 2020

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 21

Black-Scholes Weighted Average Assumption Three Months Ended March 31, 2021

Expected dividend yield None

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Under the ESPP, employees may elect to contribute after-tax earnings to purchase shares at 85 % of the closing fair market value of the Company’s common stock on either the offering date or the purchase date, whichever is less.

During the nine months ended September 30, 2020, 36,668 shares were purchased and issued through the ESPP.

During the three months ended March 31, 2021, no shares were purchased and issued through the ESPP.

NOTE 11— STOCKHOLDERS’ EQUITY

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The following table illustrates the changes in the balances of the Company’s accumulated other comprehensive income (loss) for the periods presented (in thousands):

Nine Months Ended

September 30,

Three Months Ended

Net unrealized gains (losses) from available-for-sale investments:

Balance at beginning of period $ 318 $ 322

Other comprehensive income before reclassifications 525 727

Net unrealized loss on investments, net of tax ( 150 ) ( 1,368 )

Foreign currency translation adjustments 4 —

Amounts reclassified from accumulated other comprehensive income (loss) — —

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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.

Potential common shares are exc luded from the diluted net income (loss) per share computation to the extent they would be antidilutive.

Because the Company reported a net loss for the three and nine months ended September 30, 2019, no potentially dilutive securities have been included in the computation of diluted net loss per share for those periods.

The following table sets forth the computation of basic and diluted net income (loss) per share for the three and nine mon ths ended September 30, 2020 and 2019 (in thousands, except per share amounts):

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 March 31, 2021.

Potential common shares are excluded from the diluted net income (loss) per share computation to the extent they would be antidilutive.

The following table sets forth the computation of basic and diluted net income per share for the three mon ths ended March 31, 2021 and 2020 (in thousands, except per share amounts):

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 22

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Net income (loss) $ 130,119 $ ( 6,087 ) $ 131,008 $ ( 6,128 )

Net income $ 10,369 $ 8,159

Weighted average common shares outstanding—basic 43,833 42,032

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Dilutive effect of RSUs 470 168

Dilutive effect of conversion premium on the 2022 Notes 152 —

Dilutive effect of ESPP purchase options 4 —

Weighted average common shares outstanding—diluted 45,966 42,785

Net income (loss) per share:

Basic net income (loss) per common share $ 3.03 $ ( 0.15 ) $ 3.09 $ ( 0.15 )

Diluted net income (loss) per common share $ 2.94 $ ( 0.15 ) $ 3.02 $ ( 0.15 )

Net income per share:

Basic net income per common share $ 0.24 $ 0.19

Diluted net income per common share $ 0.23 $ 0.19

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

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Weighted average number of stock options 890 5,343

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NOTE 13— INCOME TAXES

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

Income (loss) before income taxes is as follows (in thousands):

Three Months Ended

September 30, Nine Months Ended

September 30,

2020 2019 2020 2019

Income (loss) before income taxes:

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Foreign ( 3,209 ) ( 1,264 )

Total income (loss) before income taxes $ 6,150 $ ( 5,816 ) $ 7,395 $ ( 7,207 )

Current taxes:

Federal $ — $ — $ — $ —

State 603 271 959 749

Total current taxes $ 603 $ 271 $ 959 $ 749

Deferred taxes:

Federal $ ( 104,389 ) $ — $ ( 104,389 ) $ ( 1,828 )

State ( 20,183 ) — ( 20,183 ) —

Total deferred taxes $ ( 124,572 ) $ — $ ( 124,572 ) $ ( 1,828 )

Total income tax (benefit) expense $ ( 123,969 ) $ 271 $ ( 123,613 ) $ ( 1,079 )

For the three months ended September 30, 2020 and 2019, the Company recorded an income tax benefit of $ 124.0 million and income tax expense of $ 0.3 million, respectively.

For the nine months ended September 30, 2020 and 2019, the Company recorded an income tax benefit of $ 123.6 million and $ 1.1 million, respectively.

During the three months ended September 30,

2020, the Company recorded a $ 124.6 million income tax benefit relating to the release of a valuation allowance on its net deferred assets.

The income tax benefit for the nine months ended September 30, 2019 is primarily related to the MyoScience Acquisition and a $ 1.8 million reduction in the Company’s valuation allowance on its deferred tax assets due to the acquisition.

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.

As of September 30, 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 deferred taxes of $ 124.6 million are realizable and, therefore, reduced the valuation allowance accordingly.

During the nine months ended September 30, 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.

The significant components of the Company’s deferred tax assets and liabilities at September 30, 2020 and December 31, 2019 are as follows (in thousands):

September 30, December 31,

Deferred tax assets:

Net operating loss carryforwards $ 66,262 $ 68,921

Federal and state credits 17,197 16,895

Depreciation and amortization 16,203 15,778

Accruals and reserves 8,043 8,767

Stock based compensation 22,315 23,187

Inventory 1,671 1,646

Other 1,257 2,022

Total deferred tax assets 132,948 137,216

Deferred tax liabilities:

Discount on convertible senior notes ( 22,215 ) ( 8,125 )

Deferred tax assets, net of deferred tax liabilities 110,733 129,091

valuation allowance ( 6,611 ) ( 129,091 )

Net deferred tax assets $ 104,122 $ —

As of September 30, 2020, the Company’s deferred tax assets were primarily the result of U.S.

net operating losses, or NOLs.

As of September 30, 2020, the Company had federal, state, and foreign NOL carry forwards of approximately $ 255.7 million, $ 182.3 million, and $ 5.8 million, respectively.

All federal carry forward losses were generated prior to 2018 and will expire in 2025 through 2037.

The state carry forwards will expire at various dates beginning in 2025.

The foreign NOLs have an indefinite expiration.

Utilization of NOLs may be subject to a substantial limitation pursuant to Section 382 of the Internal Revenue Code, or IRC, of 1986, as amended, or Section 382, as well as similar state statutes in the event of an ownership change.

Such ownership changes have occurred in the past and could occur again in the future.

Under Section 382 of the IRC, if a corporation undergoes an “ownership change” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes (such as research and development tax credits) to offset its post-change income may be limited.

The Company may experience ownership changes in the future as a result of shifts in its stock ownership, some of which are outside the Company’s control.

Ownership changes in future periods may place additional limits on the Company’s ability to utilize its net operating loss and tax credit carry forwards.

In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

NOTE 15— ACQUISITION–RELATED CHARGES (GAINS) AND PRODUCT DISCONTINUATION, NET

MyoScience Acquisition

The Company recognized charges of $ 0.8 million and gains of $ 1.4 million in the three and nine months ended September 30, 2020, respectively, primarily related to changes in the fair value of contingent consideration from the MyoScience Acquisition.

There were $ 7.3 million in charges for the fair value of contingent consideration in the three and nine months ended September 30, 2019.

In addition, the Company also recognized charges of $ 0.2 million and $ 4.8 million in the three and nine months ended September 30, 2019, respectively, related to separation costs, asset write-downs and other restructuring charges.

See Note 10, Financial Instruments , for information regarding the methods and key assumptions used in the fair value measurements of contingent consideration.

DepoCyt(e) Discontinuation

The Company recorded gains related to its DepoCyt(e) discontinuation activities of less than $ 0.1 million and $ 0.2 million in the three and nine month periods ended September 30, 2020, respectively.

The Company recorded costs for its DepoCyt(e) discontinuation activities of $ 0.1 million in both the three and nine month periods ended September 30, 2019.

The Company ceased all production of DepoCyt(e) as of June 30, 2017.

Cash payments for the DepoCyt(e) manufacturing facility were substantially finalized in the third quarter of 2020.

Summary of Acquisition-Related Restructuring Activities and DepoCyt(e) Discontinuation Costs

The Company’s acquisition-related restructuring and DepoCyt(e) discontinuation costs as of September 30, 2020 are summarized below (in thousands):

Severance and Related Costs Asset Retirement Obligations, Other Restructuring and Discontinuation Costs Total

Balance at December 31, 2019 $ 81 $ 558 $ 639

Charges incurred — ( 39 ) ( 39 )

Cash payments made ( 81 ) ( 500 ) ( 581 )

Balance at September 30, 2020 $ — $ 19 $ 19

Total income before income taxes $ 12,724 $ 8,557

For the three months ended March 31, 2021 and 2020, the Company had income tax expense of $ 2.4 million and $ 0.4 million, respectively.

The income tax expense for the three months ended March 31, 2021 represents the estimated annual effective tax rate applied to the year-to-date domestic operating results adjusted for certain discrete tax benefits related to equity compensation.

The income tax expense for the three months ended March 31, 2020 consisted primarily of state income taxes in jurisdictions where the availability of carryforward losses were either limited or fully utilized.

During the year ended December 31, 2020, the Company determined that there was sufficient positive evidence to conclude that it was more likely than not that domestic deferred taxes were realizable and, therefore, released the valuation allowance.

The Company continues to maintain a full valuation allowance on its foreign net deferred tax balances.

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 23

NOTE 14— COMMERCIAL PARTNERS

Nuance Biotech Co.

In June 2018, the Company entered an agreement with Nuance Biotech Co.

Ltd., or Nuance, a China-based specialty pharmaceutical company, to advance the development and commercialization of EXPAREL in China.

Under the terms of the agreement, the Company had granted Nuance the exclusive rights to develop and commercialize EXPAREL.

In April 2021, Pacira and Nuance agreed to a mutual termination of the agreement due to the lack of a viable regulatory pathway that adequately safeguards the Company’s intellectual property against the risk of a generic product.

Estimated dissolution costs of $ 3.0 million have been included in other operating expenses in the condensed consolidated statements of operations for the three months ended March 31, 2021.

NOTE 15— COMMITMENTS AND CONTINGENCIES

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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 concludes 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 previously 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.

NOTE 17— COMMERCIAL PARTNERS

DePuy Synthes Sales, Inc.

In July 2020, the Company announced the termination of the Co-Promotion Agreement, dated January 24, 2017 between the Company and DePuy Synthes Sales Inc.

to jointly market and promote the use of EXPAREL for orthopedic procedures in the United States.

The Company currently estimates termination-related costs or payments to be up to $ 12.0 million, which will be recorded in selling, general and administrative expenses over the remaining contract service period.

Other Commitments and Contingencies

The United States Food and Drug Administration, or FDA, as a condition of EXPAREL approval, has required the Company to study EXPAREL in pediatric patients.

The Company was granted a deferral for the required pediatric trials in all age groups for EXPAREL in the setting of wound infiltration and is conducting these pediatric trials as post-marketing requirements, as stated in the New Drug Application (NDA) approval letter for EXPAREL.

Similarly, in Europe, the Company agreed with the European Medicines Agency, or EMA, on a Pediatric Investigation Plan, or PIP, as a prerequisite for submitting a Marketing Authorization Application (MAA) in the E.U.

Despite the United Kingdom’s withdrawal from the E.U.

(“Brexit”), the PIP will be applicable in the United Kingdom as well.

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 provided the foundation for a supplemental New Drug Application, or sNDA, and in March 2021, the Company announced that the FDA approved the submission of the sNDA seeking expansion of the EXPAREL label to include use in patients 6 years of age and older for single-dose infiltration to produce postsurgical local analgesia.

The Company is working with both the FDA and EMA to harmonize its pediatric clinical studies as much as possible between the two regions.

NOTE 16— SUBSEQUENT EVENTS

In April 2021, the Company made cash investments of $ 13.0 million in debt and equity securities of two separate pre-clinical stage biopharmaceutical companies.

The Company intends to make an additional $ 7.0 million investment if and when certain events occur.

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 24

MANAGEMENT ’ S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

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economic conditions, and our business, including our revenues, financial condition and results of operations;

the cost and timing of an early termination payment to DePuy Synthes Sales, Inc., or DePuy Synthes;

the success of our sales and manufacturing efforts in support of the commercialization of EXPAREL ® (bupivacaine liposome injectable suspension);

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These factors include items mentioned herein and the matters discussed and referenced in Part I-Item 1A.

“Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2019 and in other reports as filed with the SEC, including this Quarterly Report on Form 10-Q.

“Risk Factors” included in our Annual Report on Form 10-K for the year ended December 31, 2020 and in other reports as filed with the SEC.

Unless the context requires otherwise, references to “Pacira,” “we,” the “Company,” “us” and “our” in this Quarterly Report on Form 10-Q refer to Pacira BioSciences, Inc.

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In addition, references in this Quarterly Report on Form 10-Q to DepoCyt(e) mean DepoCyt ® when discussed in the context of the United States, or U.S., and Canada and DepoCyte ® when discussed in the context of the European Union, or E.U.

Pacira is the leading provider of non-opioid pain management options to advance and improve outcomes for healthcare practitioners and their patients.

Our long-acting, local analgesic EXPAREL ® (bupivacaine liposome injectable suspension) was commercially launched in April 2012.

Pacira is the industry leader in our commitment to non-opioid pain management and regenerative health solutions to improve patients’ journeys along the neural pain pathway.

EXPAREL, our long-acting, local analgesic was commercially launched in April 2012.

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.

EXPAREL is currently indicated for single-dose infiltration in adults to produce postsurgical local analgesia and as an interscalene brachial plexus nerve block to produce postsurgical regional analgesia.

Since its initial approval in 2011 for single-dose infiltration, more than seven million patients have been treated with EXPAREL.

We drop-ship EXPAREL directly to the end-user based on orders placed to wholesalers or directly to us, and there is no product held by wholesalers.

In April 2019, we acquired iovera° ® ,

a handheld cryoanalgesia device used to deliver a precise, controlled application of cold temperature only to targeted nerves.

We sell iovera° directly to end users.

EXPAREL is indicated in patients 6 years of age and older for single-dose infiltration to produce postsurgical local analgesia, and in adults as an interscalene brachial plexus nerve block to produce postsurgical regional analgesia in the U.S., and in the E.U.

as a brachial plexus block or femoral nerve block for treatment of post-operative pain in adults, and as a field block for treatment of somatic post-operative pain from small- to medium-sized surgical wounds in adults.

Since its initial approval in 2011 for single-dose infiltration, more than eight million patients have been treated with EXPAREL.

We drop-ship EXPAREL directly to the end-user based on orders

placed to wholesalers or directly to us, and there is no product held by wholesalers.

In April 2019, we acquired iovera°, a handheld cryoanalgesia device used to deliver a precise, controlled application of cold temperature only to targeted nerves, which we sell directly to end users.

The iovera° system is highly complementary to EXPAREL as a non-opioid therapy that alleviates pain by disrupting pain signals being transmitted to the brain from the site of injury or surgery.

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expand and enhance our manufacturing capacity for EXPAREL and iovera°;

invest in products, businesses and technologies and support legal matters.

and invest in products, businesses and technologies.

Novel Coronavirus (COVID-19) Pandemic

During the second quarter of 2020, our 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.

Our net product sales were negatively impacted by the COVID-19 pandemic in 2020 and have continued to be thus far in 2021, due to the significant postponement or suspension in the scheduling of elective surgical procedures resulting from public health guidance and government directives.

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

however, we do not know how long it will take the surgical community to return to normal operations, or if restrictions on elective surgeries will recur.

however while many restrictions have since eased and COVID-19 vaccines become more widely available and administered to the general public, we still do not know how long it will take the elective surgery market to normalize, or if restrictions on elective procedures will recur.

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

Our Fremont, California facility, where we manufacture iovera°, was closed for three weeks in March 2020 to implement safety protocols and guidelines, and resumed normal operations in April 2020.

To date, there have been no material impacts to our supply chain.

With the reopening of many states, the ability of our sales representatives to renew their in-person engagement efforts, in conjunction with remote efforts, has occurred across all sites of care, with more focus on physician offices and ambulatory surgical centers.

Our offices have re-opened on a voluntary basis with strict safety and hygiene guidelines implemented, and we continue to support remote working as appropriate.

Our offices have re-opened with strict safety and hygiene guidelines implemented, and we continue to support remote working as appropriate.

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

It is not clear what the potential effects may be to our business going forward, including the impact on our revenues, results of operations or financial condition, particularly if these pandemic conditions persist or exacerbate over an extended period of time, including if states return to placing restrictions on elective surgical procedures.

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

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

We have also taken advantage of some of the provisions of the Coronavirus Aid, Relief and Economic Security (CARES) Act, mainly by deferring the payment of certain employer payroll taxes.

For more information, see “Liquidity and Capital Resources” below.

The nature and extent of such impacts will depend on future developments, which are highly uncertain and cannot be predicted, including the availability and efficacy of COVID-19 vaccines and the willingness of the general public to get vaccinated.

We will continue to actively monitor the situation and implement measures recommended by federal, state or local authorities, or that we determine are in the best interests of our patients, employees, partners, suppliers, shareholders and stakeholders.

For a description of risks facing the Company that relate to the COVID-19 pandemic or any other future pandemic, epidemic or outbreak of contagious disease, see Item 1A.

“Risk Factors” below.

For a description of risks facing the Company that relate to the COVID-19 pandemic or any other future pandemic, epidemic or outbreak of contagious disease, see our Annual Report on Form 10-K for the year ended December 31, 2020 .

Recent Highlights

• In July 2020, we completed a private placement of $402.5 million in aggregate principal amount of 0.750% convertible senior notes due 2025, or 2025 Notes.

We used part of the net proceeds from the issuance of the 2025 Notes to repurchase $185.0 million in aggregate principal amount of our 2.375% convertible senior notes due 2022, or 2022 Notes, in privately-negotiated transactions for an aggregate of approximately $211.1 million in cash (including accrued interest).

For more information, see Note 9, Debt , to our condensed consolidated financial statements included herein and “Liquidity and Capital Resources” below.

• In September 2020, we announced that the European Medicines Agency’s, or EMA, Committee for Medicinal Products for Human Use, or CHMP, adopted a positive opinion recommending marketing authorization for EXPAREL for postsurgical analgesia.

The European Commission will review the CHMP opinion and is expected to adopt a final decision in November 2020.

The decision will be applicable to all 27 E.U.

member states plus the United Kingdom, Iceland, Norway and Liechtenstein.

• In October 2020, we announced the grand opening of the Pacira Innovation and Training center at Tampa (the “PITT”).

Designed to advance clinician understanding of the latest local, regional and field block approaches for managing pain, the PITT will provide training for anesthesiologists and surgeons working to reduce or eliminate patient exposure to opioids.

• In December 2020, we made a €1.0 million initial investment in GeneQuine Biotherapeutics GmbH, or GeneQuine, a privately held biopharmaceutical company headquartered in Hamburg, Germany.

In January 2021, we made an additional €1.0 million investment in the form of a convertible note.

We will make an additional €4.0 million investment if and when GeneQuine achieves certain prespecified near-term milestones related to its lead gene therapy product candidate, GQ-303.

Up to €2.5 million of our total investment will be in the form of a convertible note, which includes the investment made in January 2021.

• In March 2021, the FDA approved the submission of our sNDA seeking expansion of the EXPAREL label to include use in patients 6 years of age and older for single-dose infiltration to produce postsurgical local analgesia.

With this approval, EXPAREL is the first and only FDA approved long-acting local analgesic for the pediatric population as young as age six.

• In April 2021, we made a cash investment of $3.0 million in a convertible note agreement with Spine BioPharma, LLC, or Spine BioPharma, a preclinical stage biopharmaceutical company developing a non-opioid solution to relieve pain and restore functionality.

The investment will support the advancement of Spine BioPharma’s lead candidate, Remedisc™, a first-in-class therapeutic for the treatment of degenerative disc disease.

We will make an additional $7.0 million investment if and when Spine BioPharma achieves certain prespecified milestones.

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 26

In the U.S., EXPAREL is currently indicated in patients 6 years of age and older for single-dose infiltration to produce postsurgical local analgesia, and in adults as an interscalene brachial plexus nerve block to produce postsurgical regional analgesia.

Safety and efficacy have not been established in other nerve blocks.

Phase 4 Trials

We are expanding the clinical evidence for EXPAREL through Phase 4 clinical trials across several surgical specialties.

We have completed two successful studies of EXPAREL in patients undergoing Cesarean section, or C-section.

The first study compared an EXPAREL transversus abdominis plane, or TAP, block to a bupivacaine TAP block.

This was a multicenter, randomized, double-blind study across 13 clinical sites in the United States, in patients undergoing elective C-section and receiving spinal anesthesia and a multimodal analgesic regimen.

Patients were randomized (1:1) to receive EXPAREL 266 mg plus bupivacaine HCl 50 mg or bupivacaine HCl 50 mg alone administered via TAP field block after delivery.

Efficacy was evaluated in a pre-specified modified intent-to-treat (mITT) population which met the study criteria regarding proper administration of TAP and multimodal regimen (N=136).

Key findings include:

• Significant reduction in total opioid consumption with EXPAREL plus bupivacaine HCl versus bupivacaine HCl

• 52% reduction through 72 hours, the primary endpoint of the study (least squares mean [LSM] standard error [SE], 15.5 [6.67] vs 32.0 [6.25] mg, respectively;

• 49% reduction at one week (LSM [SE], 23.3 [9.75] vs 45.8 [9.13] mg, respectively;

• 41% reduction of opioid consumption at two weeks, although results did not reach statistical significance (LSM [SE], 28.2 [11.20] vs 47.8 [10.49] mg, respectively;

• Significantly higher percentage of opioid-spared patients with EXPAREL versus bupivacaine HCl, defined as patients who took no more than one oxycodone 10 mg tablet (or equivalent) with no opioid-related side effects through 72 hours

• The percentage of opioid-spared patients was 2.2 times higher in the EXPAREL group vs bupivacaine HCl group (54% vs 25%, respectively;

These data were published in the peer reviewed journal, Anesthesia and Analgesia , in August 2020.

In January 2020, we reported positive topline results from a second C-section study (known as “CHOICE”).

The Phase 4, multicenter, randomized, active-controlled study across 18 clinical sites in the United States, enrolled 167 patients undergoing elective C-section.

Patients were randomized (1:1:1) to receive either 150 mcg morphine spinal anesthesia plus a standard of care postoperative pain regimen, 50 mcg morphine spinal anesthesia plus EXPAREL TAP field block or morphine-free spinal anesthesia plus EXPAREL TAP block.

Patients in the EXPAREL arms received a protocol-defined postoperative pain management regimen comprised of ketorolac, acetaminophen and ibuprofen.

All patients could receive opioid rescue pain medicine upon request for breakthrough pain.

The study achieved its primary endpoint with a statistically significant reduction in total postsurgical opioid consumption while maintaining pain scores through 72 hours (p≤0.001).

EXPAREL demonstrated statistical significance for the key secondary endpoint of a reduction in the incidence and severity of itching for 72 hours after surgery (p≤0.05).

Full study results will be submitted for publication in the peer-reviewed medical literature later this year.

We recently discontinued enrollment in our Phase 4 study in spine surgeries (known as “FUSION”).

This multicenter, prospective, active-controlled, real world study compared EXPAREL in multimodal regimens to the standard of care for postsurgical pain management in patients undergoing lumbar posterior spine surgeries.

While the use of EXPAREL continues to significantly expand in spinal procedures, medical practice is rapidly evolving with regional approaches becoming more widespread and procedures shifting to the 23-hour stay environment.

Given this changing treatment landscape, we closed enrollment early as the protocol was becoming less feasible and less reflective of current practice.

The data from approximately 65 FUSION study subjects will be analyzed with the intent to create either a future study or registry for this patient population.

In surgical settings where we are seeing positive outcomes for EXPAREL as part of an enhanced recovery after surgery, or ERAS, protocol (such as colorectal, breast reconstruction and hip fracture procedures), we are investing in training around the protocol and collecting real-world data on the standard-of-care without EXPAREL compared to an EXPAREL-based ERAS protocol.

Our Phase 4 strategy also supports clinician education on procedure-specific best-practice care for improved patient outcomes and customer satisfaction within our approved indications.

In the E.U., EXPAREL is indicated as a brachial plexus block or femoral nerve block for treatment of post-operative pain in adults, and as a field block for treatment of somatic post-operative pain from small- to medium-sized surgical wounds in adults.

Label Expansion

In December 2019, we reported positive topline results from our Phase 3 registration study (known as “PLAY”) of EXPAREL administered as a single-dose infiltration in pediatric patients undergoing spinal or cardiac surgeries.

In March 2021, the FDA approved our sNDA to expand the EXPAREL label to include use in patients 6 years of age and older for single-dose infiltration to produce postsurgical local analgesia.

With this approval, EXPAREL is the first and only FDA approved long-acting local analgesic for the pediatric population as young as age six.

The sNDA was based on the positive data from the Phase 3 PLAY study of EXPAREL infiltration in pediatric patients undergoing spinal or cardiac surgeries.

Overall findings were consistent with the pharmacokinetic and safety profiles for adult patients with no safety concerns identified at a dose of 4 mg/kg.

Based on the positive data from the PLAY study, we submitted an sNDA to the FDA seeking expansion of the EXPAREL label to include single-dose infiltration to provide postsurgical analgesia in children aged six and over.

The sNDA has a Prescription Drug User Fee Act (PDUFA) action date of March 22, 2021.

The PLAY study enrolled 98 patients to evaluate the pharmacokinetics and safety of EXPAREL for two patient groups:

The PLAY study enrolled 98 patients to evaluate safety and the pharmacokinetics of EXPAREL for two patient groups:

patients aged 12 to less than 17 years and patients aged 6 to less than 12 years.

In agreement with the FDA, the primary and secondary objectives of the PLAY study were to evaluate the pharmacokinetics and safety of EXPAREL, respectively.

The full study results will be submitted for publication in the peer-reviewed medical literature.

We are also working with the FDA to finalize a regulatory pathway to expand the EXPAREL label to include EXPAREL administered as a nerve block in the pediatric setting.

Per FDA guidance, the primary objectives of the PLAY study were to evaluate the pharmacokinetics and safety of EXPAREL.

We are also working with the FDA to finalize a regulatory pathway to expand the EXPAREL label for patients less than six years of age, as well as the administration of EXPAREL as a nerve block in the pediatric setting, and are working with both the FDA and the European Medicines Agency, or EMA, to harmonize our pediatric clinical studies as much as possible between the two regions.

Nerve Block in Lower Extremity Surgery

We are initiating a Phase 3 study for nerve block in lower extremity surgeries (known as “STRIDE”) that is comparing EXPAREL nerve blocks in lower extremity surgeries to bupivacaine nerve blocks in lower extremity surgeries in patients undergoing foot and ankle surgeries.

We have been working closely with the FDA on the design of this study to maximize the chances of supporting an sNDA submission seeking label expansion to include nerve blocks in lower extremity surgeries should the study hit its primary endpoints.

We recently completed enrollment in a Phase 3 study for nerve block in lower extremity surgeries (known as “STRIDE”) that compared an EXPAREL nerve block in lower extremity surgeries to a bupivacaine lower extremity nerve block in patients undergoing foot and ankle surgeries.

We believe positive results from this study will support an sNDA submission seeking label expansion to include lower extremity nerve blocks.

A filing strategy was agreed to with the FDA, and we intend to file a variation with the EMA.

We believe the addition of this indication is significant as anesthesia-driven regional approaches using nerve and field blocks continue to expand as institutional protocols.

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We have defined a global expansion strategy for EXPAREL that we believe provides us with the opportunity to increase our revenue and leverage our fixed cost infrastructure.

In September 2020, the EMA’s CHMP adopted a positive opinion recommending marketing authorization for EXPAREL for postsurgical analgesia.

The CHMP is a scientific committee of the EMA that reviews medical product applications on their scientific and clinical merit.

The CHMP recommended granting EXPAREL marketing authorization with the following indication:

EXPAREL is indicated as a brachial plexus block or femoral nerve block for treatment of post-operative pain in adults, and as a field block for treatment of somatic post-operative pain from small- to medium-sized surgical wounds in adults.

The European Commission will review the CHMP opinion and is expected to adopt a final decision in November 2020.

The decision will be applicable to all 27 E.U.

In the E.U., EXPAREL was granted marketing authorization in November 2020.

We are planning to launch EXPAREL together with iovera° in targeted European countries during the third quarter of 2021.

We do not intend to pursue a partnership to commercialize EXPAREL in Europe.

The European Commission decision is applicable to all 27 E.U.

member states plus the United Kingdom, Iceland, Norway and Liechtenstein.

In Canada, which is a concentrated market driven by four provinces, Health Canada has validated our New Drug Submission and we are currently in labeling discussions.

We do not intend to pursue a commercial partnership to commercialize EXPAREL in Europe or Canada.

In China, we have an agreement with Nuance Biotech Co.

Ltd., a China-based specialty pharmaceutical company, for the development and commercialization of EXPAREL.

We have completed a pharmacokinetic study requested by the National Medical Products Administration, or NMPA, in China, and we are planning to meet with the NMPA to finalize our regulatory path forward.

There is no assurance that we will receive approval from the European Commission, Health Canada, the NMPA or any other jurisdiction.

Despite the United Kingdom’s withdrawal from the E.U.

(“Brexit”), this approval is recognized by the United Kingdom Medicines and Healthcare products Regulatory Agency (MHRA).

In Canada, Health Canada has validated our New Drug Submission and we remain in labeling discussions.

In China, we had an agreement with Nuance Biotech Co.

Ltd., or Nuance, a China-based specialty pharmaceutical company, for the development and commercialization of EXPAREL.

In April 2021, we and Nuance agreed to a mutual termination of the agreement due to the lack of a viable regulatory pathway that adequately safeguards our intellectual property against the risk of a generic product.

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The iovera° System

The iovera° system is highly complementary to EXPAREL as a non-opioid therapy that produces cryoanalgesia via a handheld device by disrupting pain signals transmitted to the brain from the site of injury or surgery and alleviates pain.

The iovera° system is 510(k) cleared in the U.S., has a CE mark in the E.U.

and is cleared for marketing in Canada for the blocking of pain, pain relief and symptoms associated with osteoarthritis of the knee as well as general surgical use.

The iovera° system is highly complementary to EXPAREL as a novel cold technology that administers a non-pharmacological nerve block to safely and immediately deliver long-term, non-opioid pain control.

The iovera° handheld device is 510(k) cleared in the U.S., has a CE mark in the E.U.

and is cleared for marketing in Canada for the blocking of pain.

It is also indicated for the relief of pain and symptoms associated with arthritis of the knee for up to 90 days.

Our commercial strategy for iovera° focuses on two broad market segments.

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We are enrolling patients into our PREPARE study that will evaluate iovera° and EXPAREL for TKA.

As many as 30 percent of presurgical patients with end-stage knee osteoarthritis use prescription opioids.

As many as 30% of presurgical patients with end-stage knee osteoarthritis use prescription opioids.

With iovera°, our goal is to provide patients with several months of non-opioid pain control to allow them to prepare for surgery with an appropriate regimen.

We also believe that EXPAREL for surgical pain control and EXPAREL plus iovera° for postsurgical pain control could support rapid functional recovery.

We also believe that EXPAREL plus iovera° for postsurgical pain control could support rapid functional recovery.

The second target market is iovera° for osteoarthritis patients who have failed conservative treatments, such as non-steroidal anti-inflammatory drugs or viscosupplementation, and are seeking drug-free, opioid-free, surgery-free pain management for several months.

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• iovera° can be delivered precisely using ultrasound guidance or an anatomical landmark.

We believe the combination of iovera° and EXPAREL will become the preferred procedural solution that will empower patients and their healthcare providers to take control of the patients’ osteoarthritis journey, while minimizing the need for opioids.

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| Q1 2021 Form 10-Q | Page 28

We will be investing in key clinical studies to demonstrate the synergy of iovera° and EXPAREL to manage pain while reducing or eliminating opioids.

Product Pipeline

Given the proven safety, flexibility and customizability of our DepoFoam platform for acute, sub-acute and chronic pain applications, we have additional DepoFoam-based products in preclinical development.

Following data readouts from preclinical and feasibility studies for these candidates, we have prioritized two programs for clinical development:

(i) the intrathecal delivery of a DepoFoam-based analgesic for acute and chronic pain and (ii) DepoDexmedetomidine, a sedative-analgesic for end-of-life pain and painful conditions in the elderly.

We plan to invest in clinical initiatives to broaden the scope of iovera° applications and improve its functionality for current and future end users.

This will be accomplished through enhancements across the product line, which is comprised of single-use disposable units as well as non-disposable handheld devices.

In parallel, our business development team continues to pursue innovative acquisition targets that align with our strategy and are complementary to EXPAREL and iovera° by thoughtfully pursuing adjacent opportunities that are of great interest to the surgical and anesthesia audiences we are already calling on today.

Our goal is to build a portfolio of customer-focused non-opioid and regenerative health solutions to improve patients’ journeys along the neural pain pathway.

Product Portfolio and Product Candidate Pipeline

Our current product portfolio and product candidate pipeline, along with anticipated milestones over the next 12 to 18 months, are summarized in the table below:

* Study designs have not been finalized for infiltration in pediatric patients aged 0 to 6 years old or for nerve block in pediatric patients.

- TAP block is a transversus abdominis plane field block

- NOCITA ® is a registered trademark of Aratana Therapeutics, Inc., a wholly owned subsidiary of Elanco Animal Health, Inc.

Pacira Innovation and Training Center of Tampa

In October 2020, we announced the grand opening of the Pacira Innovation and Training center of Tampa (the “PITT”).

We designed this facility to help advance clinician understanding of the latest local, regional and field block approaches for managing pain.

The PITT provides an unparalleled training environment for healthcare providers working to reduce or eliminate patient exposure to opioids.

The PITT supports a full range of educational events to advance clinician understanding of the latest local, regional, and field block approaches for managing pain and reducing or eliminating exposure to opioids.

The PITT consists of approximately 10,000 square-feet of fully adaptable space and is equipped with state-of-the-art technology and audio/visual capabilities and features several distinct training spaces including a simulation lab equipped with seven ultrasound scanning stations;

a lecture hall featuring a 4½-foot-tall by 24-foot-wide liquid crystal display video wall to

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| Q1 2021 Form 10-Q | Page 29

support live, virtual and even global presentations;

and a green-screen broadcast studio designed to livestream content with single or multiple hosts.

In addition to our EXPAREL programs, we are hosting ongoing workshops to train new users on best practice techniques for iovera° administration at the PITT.

Led by healthcare professionals, these labs include didactic lectures and hands-on trainings including live model nerve scanning and identification using ultrasound and peripheral nerve stimulation.

The PITT also serves as a venue for national anesthesia provider organizations to host their own workshops and training sessions.

Results of Operations

Comparison of the Three and Nine Months Ended September 30, 2020 and 2019

Comparison of the Three Months Ended March 31, 2021 and 2020

Net product sales consist of sales of EXPAREL in the U.S., our bupivacaine liposome injectable suspension to Aratana Therapeutics, Inc., or Aratana, for veterinary use in the U.S.

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Three Months Ended

September 30, % Increase / (Decrease) Nine Months Ended

September 30, % Increase / (Decrease)

2020 2019 2020 2019

March 31, % Increase / (Decrease)

Net product sales:

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Bupivacaine liposome injectable suspension 792 1,206 (34)%

Total EXPAREL / bupivacaine liposome

injectable suspension net product sales 114,163 101,711 12% 290,459 292,406 (1)%

Total EXPAREL / bupivacaine liposome injectable suspension net product sales 115,470 102,475 13%

iovera° 3,268 2,270 44%

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Total revenues $ 119,027 $ 105,684 13%

EXPAREL revenue grew 12% in the three months ended September 30, 2020 versus 2019, primarily due to an increase in sales volume of 13% and a 3% increase in gross selling price per unit, partially offset by the sales mix of EXPAREL vial sizes.

The 1% decrease in net product sales of EXPAREL in the nine months ended September 30, 2020 versus 2019 was primarily due to the significant postponement or suspension of elective surgical procedures resulting from public health guidance and government directives due to the COVID-19 pandemic, beginning in mid-March 2020.

The demand for EXPAREL has generally continued to increase as a result of ambulatory surgical centers and anesthesiologists broadening the use of long-acting EXPAREL regional approaches as a foundation of multimodal opioid-minimization strategies that enable shifting inpatient procedures to 23-hour sites of care.

As part of the acquisition of MyoScience (the “MyoScience Acquisition”), we acquired the iovera° system and began recognizing net product sales in April 2019.

Net product sales increased 3% and 37% in the three and nine months ended September 30, 2020 versus 2019, respectively.

The increase in nine month revenue largely reflects the timing of the MyoScience Acquisition in 2019.

The increase in three month revenue was impacted by the COVID-19 pandemic.

EXPAREL revenue grew 13% in the three months ended March 31, 2021 versus 2020, primarily due to an increase in sales volume of 12% and a 4% increase in gross selling price per unit, partially offset by the sales mix of EXPAREL vial sizes.

The demand for EXPAREL has generally continued to increase as a result of ambulatory surgery centers and anesthesiologists broadening the use of long-acting EXPAREL regional approaches as a foundation of multimodal opioid-minimization strategies that enable shifting inpatient procedures to 23-hour sites of care.

EXPAREL utilization remained above the overall sharp decline in elective surgical procedures relative to pre-pandemic baseline levels, due to increased use in the outpatient setting.

EXPAREL utilization in emergency procedures also continues to grow.

Bupivacaine liposome injectable suspension revenue and related royalties decreased 34% and 69%, respectively, in the three months ended March 31, 2021 versus 2020, as a result of the timing of orders placed by Aratana for veterinary use.

Net product sales of iovera° increased 44% in the three months ended March 31, 2021 versus 2020, primarily due to an increased iovera° sales force and the impact that the COVID-19 pandemic had on the first quarter of 2020.

Thus far, we have seen the greatest iovera° demand as pain relief for patients in advance of TKA procedures and in chronic pain management, particularly for people with mild to severe osteoarthritis of the knee.

Any renewed government suspension of or patient or clinical decisions to delay elective surgeries would impact our future sales of EXPAREL and iovera° during the ongoing COVID-19 pandemic.

Royalty revenue reflects the royalties earned on sales to Aratana.

Royalty revenue increased 78% and 20% in the three and nine months ended September 30, 2020 versus 2019, respectively, as a result of the timing of orders placed by Aratana.

The following tables provide a summary of activity with respect to our sales related allowances and accruals related to EXPAREL for the nine months ended September 30, 2020 and 2019 (in thousands):

September 30, 2020 Returns Allowances Prompt Payment Discounts Wholesaler Service Fees Volume

Any renewed government suspension of, or reluctance of patients to have, elective surgeries would impact our future sales of EXPAREL and iovera° during the ongoing COVID-19 pandemic.

The following tables provide a summary of activity with respect to our sales related allowances and accruals related to EXPAREL for the three months ended March 31, 2021 and 2020 (in thousands):

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March 31, 2021 Returns Allowances Prompt Payment Discounts Wholesaler Service Fees Volume

Chargebacks Total

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Payments / Adjustments (111) (2,349) (1,953) (2,582) (6,995)

Balance at September 30, 2020 $ 871 $ 912 $ 976 $ 1,489 $ 4,248

September 30, 2019 Returns Allowances Prompt Payment Discounts Wholesaler Service Fees Volume

Balance at March 31, 2021 $ 1,161 $ 1,023 $ 1,000 $ 1,744 $ 4,928

March 31, 2020 Returns Allowances Prompt Payment Discounts Wholesaler Service Fees Volume

Chargebacks Total

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Payments / Adjustments (125) (2,307) (2,088) (2,858) (7,378)

Balance at September 30, 2019 $ 502 $ 866 $ 1,001 $ 1,436 $ 3,805

Total reductions to gross product sales from sales-related allowances and accruals were $18.4 million and $18.8 million, or 5.8% and 5.9% of gross product sales, for the nine months ended September 30, 2020 and 2019, respectively.

Balance at March 31, 2020 $ 609 $ 761 $ 984 $ 1,508 $ 3,862

Total reductions to gross product sales from sales-related allowances and accruals were $7.1 million and $6.4 million, or 5.7% and 5.8% of gross product sales, for the three months ended March 31, 2021 and 2020, respectively.

The overall decrease in sales-related allowances and accruals as a percentage of gross product sales was directly related to a slight decrease in discounting.

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Three Months Ended

September 30, % Increase / (Decrease) Nine Months Ended

September 30, % Increase / (Decrease)

2020 2019 2020 2019

March 31, % Increase / (Decrease)

Cost of goods sold $ 31,349 $ 29,732 5%

Gross margin 74 % 72 %

Gross margin decreased five percentage points in the three months ended September 30, 2020 versus 2019.

Of the decrease, the most significant changes were two percentage points due to higher cost of product sold, one percent percentage point due to unplanned downtime at our custom manufacturing suite in Swindon, England (under our partnership with Thermo Fisher Scientific Pharma Services, or Thermo Fisher), and one percentage point due to a planned shutdown at the company’s Science Center Campus in San Diego, California in order to prepare our manufacturing suite for a new EXPAREL capacity expansion.

Gross margin decreased two percentage points in the nine months ended September 30, 2020 versus 2019 as a result of unplanned downtime at our custom manufacturing suite in Swindon, England (under our partnership with Thermo Fisher).

Despite shelter-in-place and other restrictive orders to combat the COVID-19 pandemic in California and England, there were no interruptions to our EXPAREL operations at either the Science Center Campus or Swindon manufacturing sites as a result of the COVID-19 pandemic as the production of EXPAREL is considered essential.

Our Fremont, California facility, where we manufacture iovera°, was closed for three weeks in March 2020 to implement safety protocols and guidelines related to the COVID-19 pandemic.

The Fremont facility resumed normal operations in April 2020.

Gross margin increased two percentage points in the three months ended March 31, 2021 versus 2020.

The most significant changes were one percentage point due to increased sales of lower cost quantities manufactured at our custom manufacturing suite in Swindon, England, and one percentage point due to a price increase.

Research and Development Expenses

Research and development expenses primarily consist of costs related to clinical trials and related outside services, product development and other research and development costs, including Phase 4 trials that we are conducting to generate new data for EXPAREL and stock-based compensation expense.

Clinical and preclinical development expenses include costs for clinical personnel, clinical trials performed by third-parties, toxicology studies, materials and supplies, database management and other third-party fees.

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The following table provides a breakout of our research and development expenses during the periods indicated, including percent changes (dollar amounts in thousands):

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Three Months Ended

September 30, % Increase / (Decrease) Nine Months Ended

September 30, % Increase / (Decrease)

2020 2019 2020 2019

March 31, % Increase / (Decrease)

Clinical and preclinical development $ 8,020 $ 6,359 26%

Product development and

manufacturing capacity expansion 5,629 7,782 (28)% 18,317 20,996 (13)%

Product development and manufacturing capacity expansion 4,702 6,605 (29)%

Regulatory and other 2,051 1,669 23%

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% of total revenues 13 % 15 %

Total research and development expense decreased 28% and 16% in the three and nine months ended September 30, 2020 versus 2019, respectively.

Clinical and preclinical development expense decreased 45% in the three months ended September 30, 2020 versus 2019 due to the completion of our Phase 3 pediatric (“PLAY”) clinical trial, our Phase 4 C-Section (“CHOICE”) trial and our nerve block pilot pharmacokinetic study.

Total research and development expense remained flat in the three months ended March 31, 2021 versus 2020.

Clinical and preclinical development expense increased 26% in the three months ended March 31, 2021 versus 2020 due to ongoing enrollment in our iovera° and EXPAREL TKA (“PREPARE”) trial as well as continued and completed enrollment in our lower extremity nerve block (“STRIDE”) clinical trial.

These increases were partially offset by the completion of our Phase 3 pediatric (“PLAY”) clinical trial, our Phase 4 C-Section (“CHOICE”) trial, as well as the completion of our clinical trial for pectoral field block in breast augmentation.

In addition, we made the strategic decision to conclude enrollment in the spine (“FUSION”) study early due to protocol feasibility given the rapid evolution of medical practice for spinal procedures.

The data from approximately 65 FUSION study subjects will be analyzed with the intent to create either a future study or registry for this patient population.

These decreases were partially offset by startup activities related to our iovera° and EXPAREL (“PREPARE”) trial, our lower extremity nerve block (“STRIDE”) clinical trial and a Phase 1 intrathecal clinical trial to evaluate the safety and pharmacokinetics of EXPAREL administered via a single intrathecal injection.

The decrease of 30% in the nine months ended September 30, 2020 versus 2019 also included the completion of our pediatric pharmacokinetic study, partially offset by our pectoral field block clinical trial in breast augmentation.

Product development and manufacturing capacity expansion expense decreased 28% and 13% in the three and nine months ended September 30, 2020 versus 2019, respectively.

These decreases are mainly due to our progress in constructing the significant scale-up of our manufacturing capacity at the Thermo Fisher site in Swindon, England as the project advances from the development phase to the registration phase.

Regulatory and other expense increased 59% and 23% in the three and nine months ended September 30, 2020 versus 2019, respectively, due to start-up activities related to an iovera° clinical data registry.

For the nine months ended September 30, 2020 versus 2019, these expenditures included increases in publications of EXPAREL and iovera° abstracts.

Stock-based compensation increased by 8% and 5% in the three and nine months ended September 30, 2020 versus 2019, respectively, primarily due to accelerated stock compensation expense that occurred in the third quarter of 2020 and an increase in the number of equity awards granted.

Product development and manufacturing capacity expansion expense decreased 29% in the three months ended March 31, 2021 versus 2020.

These decreases are mainly due to our progress in constructing the significant scale-up of our manufacturing capacity at the Thermo Fisher Scientific Pharma Services, or Thermo Fisher, site in Swindon, England as the project advances from the development phase to the registration phase.

Regulatory and other expense increased 23% in the three months ended March 31, 2021 versus 2020 due to regulatory activities in support of our pediatric infiltration sNDA submission and activities related to an iovera° clinical data registry.

Stock-based compensation decreased by 7% in the three months ended March 31, 2021 versus 2020, primarily due to fewer equity awards outstanding for research and development personnel, partially offset by an increase in the average cost of equity grants.

Selling, General and Administrative Expenses

promotion and sale of EXPAREL and iovera°, expenses related to communicating the health outcome benefits of EXPAREL and educational programs for our customers.

Sales and marketing expenses primarily consist of compensation and benefits for our sales force and personnel that support our sales, marketing, medical and scientific affairs operations, commission payments to our marketing partners for the promotion and sale of EXPAREL and iovera°, expenses related to communicating the health outcome benefits of EXPAREL and educational programs for our customers.

General and administrative expenses consist of compensation and benefits for legal, finance, regulatory activities related to approved products and indications, compliance, information technology, human resources, business development, executive management and other supporting personnel.

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Three Months Ended

September 30, % Increase / (Decrease) Nine Months Ended

September 30, % Increase / (Decrease)

2020 2019 2020 2019

March 31, % Increase / (Decrease)

Sales and marketing $ 27,102 $ 27,912 (3)%

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% of total revenues 41 % 42 %

Total selling, general and administrative expenses increased 5% and decreased 4% in the three and nine months ended September 30, 2020 versus 2019, respectively.

Sales a nd marketing expenses increased 4% and decreased 10% in the three and nine months ended September 30, 2020 versus 2019, respectively.

The 4% increase was driven by a termination fee related to our co-promotion agreement with DePuy Synthes and higher compensation due to an expanded sales force, and was partially offset by lower sales commissions, outside services and travel and entertainment.

The 10% decrease was primarily driven by a decline in sales commissions, reduced marketing spend due to the cancellations of in person meetings, medical conferences, travel and higher utilization of lower cost virtual meetings due to the COVID-19 pandemic.

These were partially offset by the termination fee to DePuy Synthes, and higher sales and marketing compensation due to an expanded sales force.

We are continui ng our marketing investment in EXPAREL, which includes educational initiatives and programs related to the impact of opioids and postsurgical pain management and our national advocacy campaign designed to educate patients about non-opioid treatment options.

We recently launched the Pacira Innovation and Training center at Tampa (the “PITT”) in Tampa, Florida.

This approximately 10,000 square-foot facility will support a full range of educational events to advance clinician understanding of the latest local, regional and field block approaches for managing pain and reducing or eliminating exposure to opioids.

Additionally, we have continued investing in marketing initiatives and customer outreach for iovera°.

In the near-term, we expect that sales and marketing expenditures will continue to be impacted by the COVID-19 pandemic and its resultant effects on elective surgeries, sales commissions, cancellations of in-person industry conferences and the suspension of non-essential employee travel.

These potential reductions in expenditures could be partially offset by the termination of our Co-Promotion Agreement with DePuy Synthes to jointly market and promote the use of EXPAREL for orthopedic procedures in the United States.

We currently estimate termination-related costs or payments to be up to $12.0 million, which will be recorded in selling, general and administrative expenses over the remaining contract service period.

General and administrative expenses decreased slightly for both the three and nine months ended September 30, 2020 versus 2019.

The decreases were primarily due to lower legal expenditures related to our U.S.

Department of Justice subpoena received in April 2015, which was partially offset by expenditures to support the expansion of the business following the MyoScience Acquisition.

Stock-based compensation increased 19% and 22% in the three and nine months ended September 30, 2020 versus 2019, respectively, primarily due to an increase in personnel and the number of equity grants awarded.

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Total selling, general and administrative expenses increased 8% in the three months ended March 31, 2021 versus 2020.

Sales and marketing expenses decreased 3% in the three months ended March 31, 2021 versus 2020.

The 3% decrease was driven by the termination of our co-promotion agreement with DePuy Synthes Sales, Inc.

and was partially offset by higher compensation due to an expanded sales force and pediatric launch expenses in anticipation of the March 2021 FDA approval of the sNDA for EXPAREL in infiltration for pediatric patients aged 6 and up.

We are continuing our marketing investment in EXPAREL, which includes educational initiatives and programs related to the impact of opioids and postsurgical pain management and our national advocacy campaign designed to educate patients about non-opioid treatment options.

Additionally, we have continued our investment in clinician training of the use of EXPAREL and iovera° at our PITT training facility in Tampa, Florida.

We have also continued investing in marketing initiatives and customer outreach for iovera°.

General and administrative expenses increased 33% in the three months ended March 31, 2021 versus 2020 primarily due to an insurance recovery of $2.1 million received in early 2020 for legal expenditures related to a since-resolved Department of Justice inquiry and an increase in legal expenditures in support of other matters.

Stock-based compensation increased 17% in the three months ended March 31, 2021 versus 2020, primarily due to an increase in the average cost of equity grants, partially offset by fewer awards outstanding.

Amortization of Acquired Intangible Assets

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Three Months Ended

September 30, % Increase / (Decrease) Nine Months Ended

September 30, % Increase / (Decrease)

2020 2019 2020 2019

March 31, % Increase / (Decrease)

Amortization of acquired intangible assets $ 1,967 $ 1,967 —%

As part of the MyoScience Acquisition, we acquired intangible assets consisting of developed technology and customer relationships, with estimated useful lives of 14 and 10 years, respectively.

Amortization began in the second quarter of 2019 on a straight-line basis.

As part of the April 2019 acquisition of MyoScience (the “MyoScience Acquisition”), we acquired intangible assets consisting of developed technology and customer relationships, with estimated useful lives of 14 and 10 years, respectively.

For more information, see Note 7, Goodwill and Intangible Assets , to our condensed consolidated financial statements included herein.

Acquisition-Related Charges (Gains) and Product Discontinuation, Net

The following table provides a summary of the costs related to the MyoScience Acquisition and our DepoCyt(e) discontinuation activities during the periods indicated, including percent changes (dollar amounts in thousands):

Acquisition-Related Gains, Product Discontinuation and Other

The following table provides a summary of the costs related to the MyoScience Acquisition, our DepoCyt(e) discontinuation activities and termination costs for our agreement with Nuance during the periods indicated, including percent changes (dollar amounts in thousands):

Three Months Ended

September 30, % Increase / (Decrease) Nine Months Ended

September 30, % Increase / (Decrease)

2020 2019 2020 2019

Acquisition-related charges (gains) $ 752 $ 7,571 (90)% $ (1,410) $ 12,142 N/A

Product discontinuation charges (gains) (60) 47 N/A (189) 124 N/A

Total acquisition-related charges (gains) and

product discontinuation, net $ 692 $ 7,618 (91)% $ (1,599) $ 12,266 N/A

As part of the MyoScience Acquisition, we recognized charges in the amount of $0.8 million and gains of $1.4 million in the three and nine months ended September 30, 2020, respectively, primarily related to changes in the fair value of contingent consideration.

There were $7.3 million in fair value adjustments related to contingent consideration in the three and nine months ended September 30, 2019.

We also recognized charges of $0.2 million and $4.8 million in the three and nine months ended September 30, 2019, respectively, related to separation costs, asset write-downs and other restructuring charges.

March 31, % Increase / (Decrease)

Acquisition-related gains $ (1,127) $ (3,739) (70)%

Product discontinuation — 31 (100)%

Other 3,000 — N/A

Total acquisition-related gains, product discontinuation and other $ 1,873 $ (3,708) N/A

As part of the MyoScience Acquisition, we recognized gains in the amount of $1.1 million and $3.7 million in the three months ended March 31, 2021 and 2020, respectively, primarily related to changes in the fair value of contingent consideration.

See Note 9, Financial Instruments , to our condensed consolidated financial statements included herein, for information regarding the methods and key assumptions used in the fair value measurements of contingent consideration.

In the three and nine months ended September 30, 2020, we recorded gains of $0.1 million and $0.2 million, respectively, related to asset retirement obligations and exiting the former DepoCyt(e) production facility.

We recorded charges of less than $0.1 million and $0.1 million in the three and nine month periods ended September 30, 2019, respectively, for contract and exit costs related to the discontinuation of DepoCyt(e).

In June 2018, we entered into an agreement with Nuance, to advance the development and commercialization of EXPAREL in China.

In April 2021, we agreed to a mutual termination of the agreement due to the lack of a viable regulatory pathway that adequately safeguards our intellectual property against the risk of a generic product.

Estimated dissolution costs of $3.0 million have been included in other operating expenses in the condensed consolidated statements of operations for the three months ended March 31, 2021.

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 33

Other Income (Expense)

The following table provides information regarding other (expense) income during the periods indicated, including percent changes (dollar amounts in thousands):

The following table provides information regarding other expense, net during the periods indicated, including percent changes (dollar amounts in thousands):

Three Months Ended

September 30, % Increase / (Decrease) Nine Months Ended

September 30, % Increase / (Decrease)

2020 2019 2020 2019

March 31, % Increase / (Decrease)

Interest income $ 415 $ 1,589 (74)%

Interest expense (6,971) (6,022) 16%

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

Other, net 2,708 (4,025) N/A 2,571 (4,051) N/A

Other, net (157) (4,104) (96)%

Total other expense, net $ (6,713) $ (8,537) (21)%

Total other expense, net increased by 39% and 26% in the three and nine months ended September 30, 2020 versus 2019, respectively, primarily due to an $8.1 million loss on early extinguishment of debt incurred in conjunction with the retirement of $185.0 million aggregate principal of our 2022 Notes in July 2020.

In addition, the three and nine months ended September 30, 2020 included a $2.8 million unrealized gain on our equity investment in TELA Bio, Inc., or TELA Bio.

The three and nine months ended September 30, 2019 included a $5.4 million unrealized loss in the TELA Bio investment due to

the investment having been deemed to be impaired when an offer was made to sell shares in TELA Bio for an amount less than our carrying amount.

TELA Bio has since completed an initial public offering.

There was a reduction in interest income in both the three and nine months ended September 30, 2020 versus 2019, respectively, due to a decline in interest rates.

The increase in interest expense in both respective periods was due to the issuance of $402.5 million of aggregate principal 2025 Notes in July 2020.

Income Tax (Benefit) Expense

The following table provides information regarding our income tax (benefit) expense during the periods indicated, including percent changes (dollar amounts in thousands):

Total other expense, net decreased by 21% in the three months ended March 31, 2021 versus 2020, primarily due to lower unrealized losses on our equity investment in TELA Bio, Inc., which were $0.1 million during the three months ended March 31, 2021 and $4.0 million during the three months ended March 31, 2020.

Further, our interest income decreased in the three months ended March 31, 2021 versus 2020 due to lower short-term interest rates.

The increase in interest expense in the current period was primarily due to an increase in outstanding debt resulting from the issuance of $402.5 million aggregate principal of our 0.750% convertible senior notes due 2025, or 2025 Notes, in July 2020.

Income Tax Expense

The following table provides information regarding our income tax expense during the periods indicated, including percent changes (dollar amounts in thousands):

Three Months Ended

September 30, % Increase / (Decrease) Nine Months Ended

September 30, % Increase / (Decrease)

2020 2019 2020 2019

Income tax (benefit) expense $ (123,969) $ 271 N/A $ (123,613) $ (1,079) 100% +

March 31, % Increase / (Decrease)

Income tax expense $ 2,355 $ 398 100%+

Effective tax rate 19 % 5 %

For the three months ended September 30, 2020 and 2019, we recorded an income tax benefit of $124.0 million and income tax expense of $0.3 million, respectively.

For the nine months ended September 30, 2020 and 2019, we recorded an income tax benefit of $123.6 million and $1.1 million, respectively.

A full valuation allowance had been recorded against our net deferred tax balance as of December 31, 2019 because at that time it was more likely than not that our net deferred tax assets would not be realizable.

At each reporting date, we consider new evidence, both positive and negative, that could affect our view of the future realization of deferred tax assets.

As of September 30, 2020, in part because in the current year we achieved three years of cumulative pretax income in the U.S.

federal and state tax jurisdictions and based on our most recent forecasts, we determined that there is sufficient positive evidence to conclude that it is more likely than not that additional deferred taxes of $124.6 million are realizable and, therefore, we reduced the valuation allowance accordingly.

For more information, see Note 14, Income Taxes , to our condensed consolidated financial statements included herein.

For the three months ended March 31, 2021 and 2020, we recorded an income tax expense of $2.4 million and $0.4 million, respectively.

The increased income tax expense was driven by the release of a full valuation allowance against domestic net deferred tax assets during the year ended December 31, 2020.

Liquidity and Capital Resources

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We are highly dependent on the commercial success of EXPAREL, which we launched in April 2012.

We have financed our operations primarily with cash generated from product sales, the proceeds from the sale of equity and debt securities, borrowings under prior debt facilities and collaborative licensing and milestone revenue.

As of September 30, 2020, we had an accumulated deficit of $268.4 million, cash and cash equivalents, short-term and long-term investments of $576.2 million and working capital of $572.2 million.

The net cash proceeds from the July 2020 issuance of $402.5 million aggregate principal of the 2025 Notes was $178.9 million, after deducting fees and offering expenses of $12.5 million and using $211.1 million (including accrued interest) to retire $185.0 million in aggregate principal of our existing 2022 Notes.

For more information, see Note 9, Debt , to our condensed consolidated financial statements included herein.

As discussed above, we anticipate that the COVID-19 pandemic will continue to result in a reduction of certain commercial and clinical expenditures which would offset some of the revenue declines caused by the COVID-19 pandemic.

We have financed our operations primarily with the proceeds from the sale of convertible senior notes, common stock, product sales and collaborative licensing and milestone revenue.

As of March 31, 2021, we had an accumulated deficit of $243.5 million, cash and cash equivalents, short-term and long-term investments of $625.0 million and working capital of $488.2 million.

We currently expect that our cash, short-term and long-term investments on hand will be adequate to cover any potential short-term liquidity needs, and that we would be able to access other sources of financing should the need arise.

On March 27, 2020, the Coronavirus Aid, Relief and Economic Security (CARES) Act was signed into law in response to the COVID-19 pandemic.

The CARES Act, among other things, allows for certain measures to increase liquidity for businesses such as the deferral of employer payroll taxes, a tax credit for retaining employees and other provisions.

We currently expect to benefit from the provision to defer the payment of certain employer payroll taxes of approximately $3.3 million for calendar year 2020, of which $2.2 million has been deferred as of September 30, 2020.

The CARES Act, among other things, allowed for certain measures to increase liquidity for businesses such as the deferral of employer payroll taxes, a tax credit for retaining employees and other provisions.

We benefited from the provision to defer the payment of certain employer payroll taxes in the amount of $2.8 million for the year ended December 31, 2020.

One-half of these deferrals are due at each of December 31, 2021 and December 31, 2022.

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 34

Summary of Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities for the periods indicated (in thousands):

Nine Months Ended

September 30,

Three Months Ended

Condensed Consolidated Statements of Cash Flows Data:

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Financing activities 10,325 (1,281)

Net increase (decrease) in cash and cash equivalents $ 47,016 $ (47,387)

Net decrease in cash and cash equivalents $ (33,258) $ (23,639)

Operating Activities

During the nine months ended September 30, 2020, net cash provided by operating activities was $30.4 million, compared to $44.6 million during the nine months ended September 30, 2019.

The decrease of $14.3 million was primarily attributable to contingent consideration payments made to MyoScience securityholders—$9.4 million of which was classified as an operating outflow with the remaining $5.6 million classified as a financing outflow.

There was also a 1% decrease in net product sales of EXPAREL caused by the COVID-19 pandemic.

This decrease also included additional expenditures related to growing a team of account managers focused on the outpatient market for EXPAREL as well as marketing initiatives and customer outreach for iovera°.

During the three months ended March 31, 2021, net cash provided by operating activities was $12.1 million, compared to $6.2 million during the three months ended March 31, 2020.

The increase of $5.9 million was primarily attributable to an increase in gross margin on a 13% increase in EXPAREL net product sales, partially offset by increased general and administrative expenses, largely associated with legal expenses.

Investing Activities

During the nine months ended September 30, 2020, net cash used in investing activities was $195.3 million, which reflected $171.9 million of short-term and long-term investment purchases (net of maturities) and purchases of fixed assets of $23.4 million.

Major fixed asset purchases included equipment for a new EXPAREL capacity expansion project at our Science Center Campus and continuing expenditures for expanding our EXPAREL manufacturing capacity in Swindon, England in partnership with Thermo Fisher.

During the nine months ended September 30, 2019, net cash used in investing activities was $97.7 million, which reflected cash used to fund the MyoScience Acquisition of $118.7 million (net of $1.3 million of cash acquired), purchases of fixed assets of $5.7 million, and an additional $1.6 million investment in TELA Bio, partially offset by $28.3 million of short-term and long-term investment maturities (net of purchases).

Major fixed asset purchases included continuing expenditures for expanding our EXPAREL manufacturing capacity in Swindon, England and facility upgrades at our Science Center Campus in San Diego, California.

During the three months ended March 31, 2021, net cash used in investing activities was $55.7 million, which reflected $41.4 million of short-term and long-term investment purchases (net of maturities) and purchases of fixed assets of $13.1 million.

Major fixed asset purchases included equipment for a new EXPAREL capacity expansion at our Science Center Campus in San Diego, California, and continuing expenditures for our expanding EXPAREL manufacturing capacity in Swindon, England.

In addition, we purchased a $1.2 million convertible note from GeneQuine.

During the three months ended March 31, 2020, net cash used in investing activities was $28.6 million, which reflected $21.8 million of short-term and long-term investment purchases (net of maturities) and purchases of fixed assets of $6.7 million.

Major fixed asset purchases included equipment for a new EXPAREL capacity expansion project at our Science Center Campus.

Financing Activities

During the nine months ended September 30, 2020, net cash provided by financing activities was $211.9 million, which consisted of gross proceeds from the issuance of the 2025 Notes of $402.5 million, the exercise of stock options of $36.0 million and $1.4 million from the issuance of shares through our ESPP.

In conjunction with the issuance of the 2025 Notes, we paid $12.5 million in financing costs and retired $185.0 million in aggregate principal amount of our 2022 Notes in privately-negotiated transactions for a total of $211.1 million of cash (including $1.2 million of accrued interest classified as an operating outflow).

We also made $5.6 million of contingent consideration payments to MyoScience securityholders.

During the nine months ended September 30, 2019, net cash provided by financing activities was $5.7 million, which consisted of proceeds from the exercise of stock options of $5.0 million and $1.3 million from the issuance of shares through our ESPP, partially offset by $0.6 million of payments made to retire our 3.25% convertible senior notes due 2019.

During the three months ended March 31, 2021, net cash provided by financing activities was $10.3 million, which consisted entirely of proceeds from the exercise of stock options.

During the three months ended March 31, 2020, net cash used in financing activities was $1.3 million, which consisted of $4.7 million of contingent consideration payments made to MyoScience securityholders, partially offset by proceeds from the exercise of stock options of $3.5 million.

2025 Convertible Senior Notes

On July 10, 2020, we completed a private placement of $402.5 million in aggregate principal amount of our 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 annum, payable in arrears on February 1 and August 1 of each year, beginning on February 1, 2021.

In July 2020, we completed a private placement of $402.5 million in aggregate principal amount of our 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 annum, payable in arrears on February 1 and August 1 of each year.

The 2025 Notes mature on August 1, 2025.

At September 30, 2020, the outstanding principal on the 2025 Notes was $402.5 million.

At March 31, 2021, the outstanding principal on the 2025 Notes was $402.5 million.

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.

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

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 35

Prior to the close of business on the business day immediately preceding February 3, 2025, holders may convert the 2025 Notes under certain circumstances, including if during any given calendar quarter, our stock price closes at or above 130% of the conversion price then applicable during a period of at least 20 out of the last 30 consecutive trading days of the previous quarter.

While the 2025 Notes are currently classified on our consolidated balance sheet at September 30, 2020 as long-term debt, the future convertibility and resulting balance sheet classification of this liability will be monitored at each quarterly reporting date and will be analyzed dependent upon market prices of our common stock during the prescribed measurement periods.

While the 2025 Notes are currently classified on our consolidated balance sheet at March 31, 2021 as long-term debt, the future convertibility and resulting balance sheet classification of this liability will be monitored at each quarterly reporting date and will be analyzed dependent upon market prices of our common stock during the prescribed measurement periods.

In the event that the holders of the 2025 Notes have the right 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.

On or after August 1, 2023, we may redeem for cash, shares of our common stock or a combination of cash and shares of our common stock, at our option, all or part of the 2025 Notes if the last reported sale price (as defined in the 2025 Indenture) of our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period ending within five trading days prior to the date on which we provide notice of redemption.

This condition was not met during the quarter ended September 30, 2020.

This condition was not met during the quarter ended March 31, 2021.

See Note 8, Debt , to our condensed consolidated financial statements included herein for further discussion of the 2025 Notes.

2022 Convertible Senior Notes

On March 13, 2017, we completed a private placement of $345.0 million in aggregate principal amount of our 2022 Notes, and entered into an indenture, or 2022 Indenture, with respect to the 2022 Notes.

In March 2017, we completed a private placement of $345.0 million in aggregate principal amount of our 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 annum, payable semiannually in arrears on April 1 and October 1 of each year.

The 2022 Notes mature on April 1, 2022.

At September 30, 2020, the outstanding principal on the 2022 Notes was $160.0 million.

At March 31, 2021, the outstanding principal on the 2022 Notes was $160.0 million.

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

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

While the 2022 Notes are currently classified on our consolidated balance sheet at September 30, 2020 as long-term debt, the future convertibility and resulting balance sheet classification of this liability will be monitored at each quarterly reporting date and will be analyzed dependent upon market prices of our common stock during the prescribed measurement periods.

our common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period ending within five trading days prior to the date on which we provide notice of redemption.

This condition was not met during the quarter ended September 30, 2020.

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.

While the 2022 Notes are currently classified on our consolidated balance sheet at March 31, 2021 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.

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

This condition was not met during the quarter ended March 31, 2021.

See Note 8, Debt , to our condensed consolidated financial statements included herein for further discussion of the 2022 Notes.

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 36

Future Capital Requirements

We believe that our existing cash and cash equivalents, short-term and long-term investments and cash received from product sales will be sufficient to enable us to fund our operating expenses, capital expenditure requirements, payment of the principal on any conversions of our 2022 Notes and 2025 Notes, and to service our indebtedness through at least October 29, 2021.

Our future use of operating cash and capital requirements will depend on many forward-looking factors, including, but not limited to, the following:

• the impact of the COVID-19 pandemic, including the amounts and delays of suspended surgical procedures, clinical trials and general economic conditions;

• our ability to successfully continue to expand the commercialization of EXPAREL, including outside of the U.S.;

• the costs of expanding the commercialization of iovera°, including outside of the U.S.;

• the impact of the COVID-19 pandemic, including the amounts and delays of suspended elective surgical procedures, clinical trials and general economic conditions;

• the costs and our ability to successfully continue to expand the commercialization of EXPAREL and iovera°, including outside of the U.S.;

• the cost and timing of expanding our manufacturing facilities for EXPAREL and other product candidates, including the construction of an additional manufacturing suite at Thermo Fisher’s facility in Swindon, England and an EXPAREL capacity expansion project at our Science Center Campus in San Diego, California;

• the cost and timing of potential milestone payments to Skyepharma, which could be up to an aggregate of $36.0 million if certain milestones pertaining to net sales of DepoBupivacaine products, including EXPAREL, are met, or upon the first commercial sale in the United Kingdom, France, Germany, Italy or Spain;

• the cost and timing of an early termination payment to DePuy Synthes, which we currently estimate to be up to $12.0 million;

• the cost and timing of potential remaining milestone payments to MyoScience security holders, which could be up to an aggregate of $58.0 million if certain regulatory and commercial milestones are met, which includes one milestone payment of $10.0 million which is payable in the second quarter of 2021;

• the cost and timing of potential milestone payments to SkyePharma Holding, Inc., which could be up to an aggregate of $36.0 million if certain milestones pertaining to net sales of DepoBupivacaine products, including EXPAREL, are met, or upon the first commercial sale in the United Kingdom, France, Germany, Italy or Spain;

• the cost and timing of additional strategic investments, including additional investments under existing agreements;

• the timing of and extent to which the holders of our 2022 Notes and 2025 Notes elect to convert their notes;

• costs related to legal and regulatory issues;

• the costs of performing additional clinical trials for EXPAREL, including the pediatric trials required by the FDA as a condition of approval;

• the costs of performing additional clinical trials for EXPAREL, including the additional pediatric trials required by the FDA and EMA as a condition of approval;

• the costs of performing additional clinical trials for iovera°;

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Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements as of September 30, 2020, nor do we have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.

We do not have any material off-balance sheet arrangements as of March 31, 2021, nor do we have any relationships with unconsolidated entities or financial partnerships, such as entities often referred to as structured finance or special purpose entities.

Critical Accounting Policies and Use of Estimates

See Note 2, Summary of Significant Accounting Policies , to our condensed consolidated financial statements included herein for a discussion of recently issued accounting pronouncements and their impact or future potential impact on our

financial results, if determinable.

For a description of critical accounting policies that affect our significant judgments and estimates used in the preparation of our consolidated financial statements, refer to our most recent Annual Report on Form 10-K for the year ended December 31, 2020.

Through June 30, 2020, we had established a valuation allowance to reduce our deferred tax assets to amounts expected to be realized.

The primary basis for the valuation allowance had been our historical losses.

However, in in the current year, we achieved three years of cumulative pretax income in the U.S.

federal and state tax jurisdictions.

We have been demonstrating strong earnings from our core business, after taking into account any unusual, non-recurring items not expected to occur in future periods.

Based on our most recent forecasts, we expect these improvements to continue into future periods.

We have also considered the timing in which existing temporary differences will reverse in future periods.

Based on the positive evidence of projections of future taxable income and forecasts of future pre-tax book income, we have concluded it is more likely than not that we will realize the future benefits of our U.S.

deferred tax assets.

As a result, we recorded an income tax benefit of $124.6 million due to the reversal of our valuation allowance relating to our U.S.

federal net deferred tax assets during the third quarter of 2020.

For more information, see Note 14, Income Taxes , to our condensed consolidated financial statements included herein.

Contractual Obligations

Other than the issuance of $402.5 million of aggregate principal of our 2025 Notes and concurrent repurchase of $185.0 million aggregate principal of our 2022 Notes in July 2020 discussed above, there have been no material changes in our contractual obligations relating to our indebtedness, lease obligations and purchase obligations from those reported in our Annual Report on Form 10-K for the year ended December 31, 2019.

For more information on our contractual obligations and commercial commitments, see Part II, Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2019.

There have been no material changes in our contractual obligations relating to our indebtedness, lease obligations and purchase obligations from those reported in our Annual Report on Form 10-K for the year ended December 31, 2020.

Pacira BioSciences, Inc.

| Q1 2021 Form 10-Q | Page 37

information on our contractual obligations and commercial commitments, see Part II, Item 7 in our Annual Report on Form 10-K for the year ended December 31, 2020 .

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-Q

Item 1. Financial Statements