What changed in this filing

/stocks — the workspaceLOADING

Item 7. Management’s Discussion and Analysis

2022-02-28 compared with 2021-03-01 · 243 added, 244 removed, 136 unchanged (78% of the section changed)

2 unchanged sentences

We operate and report our financial information in one segment.

The following discussion of our financial condition and results of operations should be read in conjunction with our consolidated financial statements and the notes to those consolidated financial statements appearing in Part IV, Item 15, of this Annual Report.

The following discussion of our financial condition and results of operations should be read in conjunction with the other sections of this Annual Report, including our consolidated financial statements and the notes to those consolidated financial statements appearing in Part IV, Item 15, of this Annual Report.

This discussion contains forward-looking statements that involve significant risks and uncertainties.

4 unchanged sentences

We have omitted discussion of the year ended December 31, 2019 (the earliest of the three years covered by our consolidated financial statements presented in this Annual Report) as permitted by SEC regulations.

The complete Management’s Discussion and Analysis of Financial Condition and Results of Operations for year-to-year comparisons between 2019 and 2018 and other discussions of 2018 items can be found within Part II, Item 7, to our Annual Report filed with the SEC on February 20, 2020 .

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.

The complete Management’s Discussion and Analysis of Financial Condition and Results of Operations for year-to-year comparisons between 2020 and 2019 and other discussions of 2019 items can be found within Part II, Item 7, to our Annual Report for the year ended December 31, 2020, filed with the SEC on March 1, 2021 , which is available free of charge on the SEC’s website at www.sec.gov and our corporate website at www.pacira.com.

Pacira is the industry leader in our commitment to non-opioid pain management and providing a non-opioid option to as many patients as possible to redefine the role of opioids as rescue therapy only.

Our long-acting, local analgesic EXPAREL ® (bupivacaine liposome injectable suspension) 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 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.

EXPAREL utilizes our unique pMVL drug delivery technology that encapsulates drugs without altering their molecular structure and releases them over a desired period of time.

In the U.S., EXPAREL is the only opioid-free, long-acting local and regional analgesic approved for infiltration, field blocks and interscalene brachial plexus nerve block to produce local or regional postsurgical analgesia.

EXPAREL is also approved for infiltration in pediatric patients aged six years and older in the U.S.

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

Since its initial approval in 2011, more than ten 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.

With the MyoScience Acquisition 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.

We expect to continue to pursue the expanded use of EXPAREL and iovera° in additional procedures;

With the Flexion Acquisition in November 2021, we acquired ZILRETTA ® (triamcinolone acetonide extended-release injectable suspension), the first and only extended-release, intra-articular therapy that can provide major relief for OA knee pain for three months and has the potential to become an alternative to hyaluronic acid, or HA, and platelet rich plasma, or PRP, injections or other early intervention treatments.

We believe ZILRETTA is highly complementary to iovera°.

We expect to continue to pursue the expanded use of EXPAREL, ZILRETTA and iovera° in additional procedures;

progress our earlier-stage product candidate pipeline;

advance regulatory activities for EXPAREL, iovera° and other product candidates;

invest in sales and marketing resources for EXPAREL and iovera°;

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

advance regulatory activities for EXPAREL, ZILRETTA, iovera° and other product candidates;

invest in sales and marketing resources for EXPAREL, ZILRETTA and iovera°;

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

invest in products, businesses and technologies;

and support legal matters.

Recent Highlights

• In November 2020, the European Commission, or EC, granted marketing authorization for EXPAREL 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 EC decision is applicable to all 27 European Union member states plus the United Kingdom, Iceland, Norway and Liechtenstein.

Commercial planning is underway, with an anticipated E.U.

launch in the second half of 2021.

For more information, see the subsection titled “Global Expansion” in Part 1—Item 1 above.

• In December 2020, we made a $1.2 million (€1.0 million) initial investment in GeneQuine Biotherapeutics GmbH, or GeneQuine, a privately held biopharmaceutical company headquartered in Hamburg, Germany.

GeneQuine is advancing a gene therapy platform for the treatment of osteoarthritis and other musculoskeletal disorders.

GeneQuine’s product candidates are next-generation gene transfer vehicles.

These gene therapy vectors are highly efficient in entering joint cells to confer multi-year gene expression.

Safety of this platform has been demonstrated in several species and is currently being evaluated in an ongoing Phase 1 study.

In January 2021, we made a $1.2 million (€1.0 million) investment in the form of a convertible note.

We will make an additional $4.9 million (€4.0 million) investment upon GeneQuine achieving certain prespecified near-term milestones related to its lead gene therapy product candidate, GQ-303.

Up to $3.1 million (€2.5 million) of our total investment will be in the form of a convertible note, which includes the investment made in January 2021.

Flexion Acquisition

On November 19, 2021, we completed the Flexion Acquisition pursuant to the Merger Agreement, under which Flexion became our wholly owned subsidiary and added ZILRETTA, a non-opioid corticosteroid that employs a proprietary microsphere technology to provide extended pain relief, to our commercial offering.

The addition of ZILRETTA to our innovative non-opioid product portfolio directly aligns with our mission to provide an opioid alternative to as many patients as possible and address medical needs along the neural pain pathway.

The total consideration of $ 578.8 million included an initial payment of $428.3 million which represented $8.50 in cash per share of Flexion common stock, $20.2 million paid to settle restricted stock units and in-the-money stock options, an

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page 68

Novel Coronavirus (COVID-19) Pandemic

Our 2020 net product sales were negatively impacted by the COVID-19 pandemic, 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, 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.

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

To date, there have been no material impacts to 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.

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, including the timing of effective vaccines becoming widely available and accepted by the public.

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.

Table of Contents ,

$ 85.1 million cash payment of Flexion debt not to be assumed by us and $ 45.2 million in contingent consideration representing the fair value of contingent value rights, or CVRs, that were issued in conjunction with the Flexion acquisition.

The Merger Agreement provided for one non-tradeable CVR per share of Flexion common stock as well as one CVR per share for certain Flexion equity awards.

Each CVR entitles Flexion shareholders to contingent milestone payments of up to an aggregate of $8.00 in cash per share of Flexion common stock if certain milestones are met on or prior to December 31, 2030.

We estimate that up to an additional $380.2 million in the aggregate may be payable to holders of the CVRs if each of the applicable milestones are achieved.

For more information, see Note 5, Acquisitions , to our consolidated financial statements included herein.

Recent Highlights

• In December 2021, we closed on the $375.0 million Term Loan.

Proceeds of the Term Loan were used to replenish a portion of our funds that were used to pay the purchase price and transaction costs of the Flexion Acquisition and related transactions.

For more information, see Note 11, Debt , to our consolidated financial statements included herein.

• We recently received four Notices of Allowance from the USPTO for four EXPAREL patents that have been examined and will issue.

Two patents claim chemical composition of EXPAREL and two claim product-by-process.

After issuance, Pacira will submit these patents for listing in the FDA Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”).

After listing, the Orange Book would have a total of six EXPAREL patents each with an expiration date of January 22, 2041.

Coronavirus (COVID-19) Pandemic

Since early 2020, our revenues have been impacted by COVID-19 and pandemic-related challenges that included the significant postponement or suspension in the scheduling of elective surgical procedures due to public health guidance and government directives.

While the degree of impact has diminished during the course of the pandemic due to the introduction of vaccines and the lessening of elective surgery restrictions, certain pandemic-related operational challenges persist.

It remains unclear how long it will take the elective surgery market to normalize or if restrictions on elective procedures will recur due to future COVID-19 variants or otherwise.

For instance, while many restrictions have since eased with COVID-19 vaccines now widely available, the elective surgery market faced additional pandemic-related challenges in August and September 2021 due to regional surges in COVID-19 Delta variant cases, staffing shortages and fatigue from care teams addressing significant procedure backlogs, and in December 2021, the COVID-19 Omicron variant prompted some government restrictions on elective procedures and surgical staffing challenges which began to ease in January 2022.

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.

1 unchanged sentence

“Risk Factors” in this Annual Report.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page 69

Results of Operations

Comparison of the Years Ended December 31, 2021 and 2020

Net product sales consist of sales of EXPAREL in the U.S., our bupivacaine liposome injectable suspension to Aratana for veterinary use in the U.S., and sales of iovera° in the U.S.

Royalty revenues are from our collaborative licensing agreements.

Net product sales consist of (i) EXPAREL in the U.S., E.U.

(ii) ZILRETTA in the U.S.;

(iii) iovera° in the U.S.

and (iv) sales of, and royalties on, our bupivacaine liposome injectable suspension, primarily to Aratana for veterinary use.

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

2 unchanged sentences

EXPAREL $ 506,515 $ 413,338 23%

Bupivacaine liposome injectable suspension 4,459 3,153 41 %

Total EXPAREL / bupivacaine liposome injectable suspension

net product sales 417,797 411,030 2 %

iovera° 16,162 8,817 83%

Bupivacaine liposome injectable suspension 3,606 4,459 (19)%

Total net product sales 538,966 426,614 26%

Royalty revenue 2,442 3,033 (19)%

Collaborative licensing and milestone revenue 125 — N/A

Total revenues $ 541,533 $ 429,647 26%

EXPAREL revenue grew 1% in 2020 compared to 2019, primarily due to an increase in sales volume of 1% and a 4% increase in gross selling price per unit, partially offset by the sales mix of EXPAREL vial sizes.

EXPAREL revenue was impacted by 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-

(1) ZILRETTA net product sales are attributable to the period beginning November 19, 2021, the date of the Flexion Acquisition.

EXPAREL net product sales grew 23% in 2021 compared to 2020, primarily due to increases of 21% in gross vial volume and increases of 4% in gross selling price per unit, partially offset by the sales mix of EXPAREL vial sizes.

Although the demand for EXPAREL has continued to increase primarily as a result of ASCs 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, the elective surgery market faced additional pandemic-related challenges from August through December 2021 due to regional surges in COVID-19 Delta and Omicron variant cases, staffing shortages and fatigue from care teams addressing significant procedure backlogs.

In 2020, we were also impacted by the suspension of elective surgeries due to the COVID-19 pandemic.

EXPAREL utilization remains above the overall sharp decline in elective surgical procedures relative to pre-pandemic baseline levels due to increased utilization in outpatient settings and emergent procedures.

Bupivacaine liposome injectable suspension revenue and the related royalty revenue both decreased 19% in 2021 versus 2020 due to the timing of orders placed by Aratana for veterinary use.

As a result of the Flexion Acquisition, we acquired ZILRETTA in November 2021, which is an extended-release corticosteroid treatment for OA knee pain.

We recognized net product sales of $12.7 million for the year ended December 31, 2021, which are attributable to the period beginning on November 19, 2021, the closing date of the Flexion Acquisition.

Net product sales of iovera° increased 83% in 2021 versus 2020 primarily due to an increased iovera° sales force, new customers and the impact that the COVID-19 pandemic had in 2020.

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

The collaborative licensing and milestone revenue recognized in 2021 was the result of a portion of an upfront payment recognized under our distribution agreement with Eurofarma for the development and commercialization of EXPAREL in Latin America.

For more information, see Note 19, Commercial Partners, to our consolidated financial statements included herein.

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

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page 70

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 12% in 2020 versus 2019.

The increase in revenue largely reflects the timing of the MyoScience Acquisition in 2019 offset in part by the impact of the COVID-19 pandemic.

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

Royalty revenue reflects the royalties earned on net product sales of bupivacaine liposome injectable suspension to Aratana for veterinary use, both of which increased over 40% in 2020 versus 2019 as a result of the timing of orders placed by Aratana.

Table of Contents ,

Cost of Goods Sold

5 unchanged sentences

Gross margin 74% 73%

Gross margin decreased two percentage points in 2020 versus 2019.

One percentage point was due to unplanned downtime at our custom manufacturing suite in Swindon, England (under our partnership with Thermo Fisher), and one percentage point was due to a planned shutdown at our Science Center Campus in San Diego, California in order to prepare our manufacturing suite for a new EXPAREL capacity expansion project.

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 one percentage point in 2021 versus 2020 primarily due to downtime that occurred in 2020, including planned time to prepare our manufacturing suite for a new EXPAREL capacity expansion project at our Science Center Campus in San Diego, California and to a lesser extent an EXPAREL 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 iovera° and stock-based compensation expense.

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 trials that we are conducting to generate new data for EXPAREL, ZILRETTA and iovera° 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.

3 unchanged sentences

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

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page 63

Year Ended December 31, % Increase / (Decrease)

6 unchanged sentences

Total research and development expense decreased 7% in 2021 versus 2020.

Clinical and preclinical development expense decreased 24% due to the completion of our Phase 3 pediatric (“PLAY”) clinical trial, our Phase 4 C-Section (“CHOICE”) trial and both our nerve block and pediatric pharmacokinetic studies.

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 inform future studies in 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, as well as the completion of our clinical trial for pectoral field block in breast augmentation.

In addition, these increases included a Phase 1 intrathecal clinical trial to evaluate the safety, pharmacokinetics and sensory selective efficacy of EXPAREL.

Certain clinical trials were slower than normal during 2020 as a result of the COVID-19 pandemic.

Product development and manufacturing capacity expansion expense decreased 21% in 2020 versus 2019 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 expenses increased 8% in 2020 versus 2019 due to increases in the publication of clinical manuscripts and abstracts, as well as startup activities related to the iovera° clinical database registry.

Stock-based compensation increased 2% in 2020 versus 2019 primarily due to an increase in the number of equity awards granted.

Clinical and preclinical development expense increased 4% due to increased activities in our iovera° and EXPAREL TKA (“PREPARE”) trial, activities related to two EXPAREL lower extremity nerve block trials in bunionectomy and TKA and ongoing trials for products acquired from the Flexion Acquisition in November 2021.

Product development and manufacturing capacity expansion expense decreased 18% in 2021 versus 2020 mainly attributable to the completion of the significant scale-up of our manufacturing capacity at the Thermo Fisher site in Swindon, England.

Regulatory and other expenses decreased 13% in 2021 versus 2020.

Regulatory expenses decreased due to the completion of our regulatory review and approval of our MAA in the E.U.

Other research and development expenses decreased with lower spend for EXPAREL and iovera° publications.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page 71

Table of Contents ,

Stock-based compensation increased 5% in 2021 versus 2020 primarily due to an increase in the number of equity awards granted to research and development personnel.

We expect that research and development will increase in 2022 due to the addition of ZILRETTA, PCRX-201 and PCRX-301 to our product portfolio and pipeline.

We believe ZILRETTA’s extended-release profile may provide effective treatment for OA pain of the shoulder, and we intend to initiate a Phase 3 trial investigating ZILRETTA in shoulder OA in 2022.

In addition, we are planning a comparative safety study of ZILRETTA in patients with Type 2 diabetes and are evaluating a repeat dosing study.

Selling, General and Administrative Expenses

Sales and marketing expenses primarily consist of compensation and benefits for our sales force and personnel that support our sales, marketing, 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.

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, payments to our marketing partners for the promotion and sale of our products, expenses related to communicating the health outcome benefits of our products, investments in provider-level market access and patient reimbursement support and educational programs for our customers.

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

8 unchanged sentences

% of total revenue 37% 45%

Total selling, general and administrative expenses decreased 4% in 2020 versus 2019.

Sales and marketing expenses decreased 8% in 2020 versus 2019.

The 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 increased utilization of lower cost virtual meetings due to the COVID-19 pandemic.

These were partially offset by a termination fee to DePuy Synthes of up to $9.0 million, and higher sales and marketing compensation due to an expanded sales force.

Total selling, general and administrative expenses increased 3% in 2021 versus 2020.

Sales and marketing decreased 6% in 2021 versus 2020 driven by the termination of our co-promotion agreement with DePuy Synthes Sales, Inc.

effective January 2021.

This was partially offset by compensation expenses due to an expanded sales force for EXPAREL and iovera°, the addition of a sales force to support ZILRETTA and set-up costs for our new contracted sales force in Europe.

We are continuing our marketing investment in EXPAREL and iovera°, 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 continue our investment in clinician training in the use of EXPAREL and iovera° at our PITT training facility in Tampa, Florida.

We also incurred launch expenses for EXPAREL in connection with our label expansion for use in pediatric populations as young as age six.

We expect that the addition of ZILRETTA to our commercial portfolio will increase our sales and marketing spend in 2022 as we increase the size of our ZILRETTA and iovera° sales force which is providing clinicians with two unique OA treatment options to individualize patient care and patient reimbursement support for ZILRETTA.

General and administrative expenses increased 26% in 2021 versus 2020 due to increased legal costs, which includes an insurance recovery of $2.1 million in 2020 for legal expenditures related to a since-resolved Department of Justice inquiry and additional administrative and integration costs related to the Flexion Acquisition.

Stock-based compensation increased 6% in 2021 versus 2020, primarily due to an increase in the number of grants outstanding to selling, general and administrative personnel.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page 72

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.

General and administrative expenses decreased 3% in 2020 versus 2019.

The decrease was primarily due to lower legal expenditures related to our U.S.

Department of Justice subpoena received in April 2015, which was resolved in July 2020 and was partially offset by expenditures to support the expansion of the business following the MyoScience Acquisition.

Stock-based compensation increased 22% in 2020 versus 2019, primarily due to an increase in personnel and the number of equity grants awarded.

Table of Contents ,

Amortization of Acquired Intangible Assets

2 unchanged sentences

Amortization of acquired intangible assets $ 13,553 $ 7,866 72%

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.

Beginning in the second quarter of 2019, these are being amortized on a straight-line basis.

For more information, see Note 9, Goodwill and Intangible Assets , to our consolidated financial statements included herein.

Amortization of acquired intangible assets increased 72% in 2021 versus 2020 due to the acquisition of Flexion in November 2021.

As part of the acquisition, we acquired a developed technology intangible asset for ZILRETTA for OA knee pain, which is being amortized over a useful life of approximately ten years.

For more information, see Note 5, Acquisitions, to our consolidated financial statements included herein.

Acquisition-Related Charges, Product Discontinuation and Other

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

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

Year Ended December 31, % Increase / (Decrease)

1 unchanged sentence

Product discontinuation — (188) N/A

Other — 3,500 (100) %

Other 3,000 — N/A

Total acquisition-related charges, product discontinuation and other $ 42,911 $ 5,166 100% +

In 2020, we recognized charges of $5.4 million related to the MyoScience Acquisition primarily due to changes in the fair value of contingent consideration.

In 2019, we recognized charges of $21.6 million, which represents $16.7 million for the changes in fair value of contingent consideration and $4.2 million for advisory costs, including legal, financial, accounting and tax services and $0.7 million for separation costs, asset write-downs and other restructuring activities related to the MyoScience Acquisition.

For more information, see Note 18, Acquisition-Related Charges and Product Discontinuance, Net , to our consolidated financial statements included herein.

In 2020, we recorded a gain of $0.2 million related to the final settlement of the lease agreement for the site of the former DepoCyt(e) manufacturing activities.

In 2019, we recorded a charge of $0.2 million primarily for the accretion of the related lease liability.

In 2021, we recognized acquisition-related charges of $39.9 million.

These charges are primarily driven by severance and other employee related costs, investment banking, legal and other professional fees, third-party services and other one-time charges associated with the Flexion Acquisition and were partially offset by a gain from changes in fair value associated with the contingent consideration related to the MyoScience Acquisition.

In 2020, we recognized charges related to the MyoScience Acquisition primarily due to changes in the fair value of contingent consideration.

For more information, see Note 18, Acquisition-Related Charges, Product Discontinuation and Other , to our consolidated financial statements included herein.

In 2021, we agreed to a mutual termination of our agreement with Nuance to advance the development and commercialization of EXPAREL in China due to the lack of a viable regulatory pathway that adequately safeguards our intellectual property against the risk of a generic product.

Dissolution costs of $3.0 million were included in other operating expenses in the consolidated statements of operations for the year ended December 31, 2021.

In 2020, we recorded a product discontinuation gain of $0.2 million related to the final settlement of the lease agreement for the site of the former DepoCyt(e) manufacturing activities.

The foregoing references to DepoCyt(e) mean DepoCyt ® when discussed in the context of the U.S.

and Canada and DepoCyte ® when discussed in the context of the E.U.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page 73

In 2019, we recorded a charge of $3.5 million related to the U.S.

Department of Justice settlement.

The settlement was paid in July 2020.

For more information, see Note 21, Commitments and Contingencies , to our consolidated financial statements included herein.

Other (Expense) Income

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

Table of Contents ,

Other Expense, Net

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

Year Ended December 31, % Increase / (Decrease)

4 unchanged sentences

Total other expense, net $ (33,520) $ (26,261) 28%

Total other expense, net increased 24% in 2020 versus 2019, 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, there was a reduction in interest income primarily due to a decline in interest rates and an increase in interest expense due to the issuance of $402.5 million of aggregate principal 2025 Notes in July 2020.

Other, net included $1.1 million of United Kingdom research and development tax credits and a $1.6 million unrealized gain on our equity investment in TELA Bio in 2020 versus an unrealized loss on the equity investment of $5.7 million in 2019.

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 increased 28% in 2021 versus 2020.

The 24% increase in interest expense was due to the increase in outstanding debt from the entry into the $375.0 million Term Loan in December 2021, the issuance of $402.5 million aggregate principal amount of our 2025 Notes in July 2020 and the assumed $201.3 million principal amount of the Flexion 2024 Notes in connection with the Flexion Acquisition.

This increase was partially offset by a decrease of interest expense associated with our 2022 Notes as a result of the $185.0 million repurchase of principal in July 2020.

In conjunction with the issuance of the 2025 Notes, in July 2020, we incurred an $8.1 million loss on early extinguishment of debt recognized due to the retirement of $185.0 million aggregate principal of our existing 2022 Notes.

Interest income decreased 81% in 2021 versus 2020 primarily due to lower interest rates and to a lesser extent the sale of available-for-sale investments in 2021 used to fund the cash portion of the purchase price consideration associated with the Flexion Acquisition.

Other, net expense for 2021 included a realized loss on the sale of our equity investment in TELA Bio, Inc., or TELA Bio, in the amount of $2.6 million.

In 2020, Other, net income included $1.1 million of U.K.

research and development tax credits and a $1.6 million unrealized gain on our equity investment in TELA Bio.

Income Tax Expense (Benefit)

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

Year Ended December 31, % Increase / (Decrease)

Income tax (benefit) expense $ (125,434) $ 268 N/A

Income tax expense (benefit) $ 14,424 $ (125,434) N/A

Effective tax rate 26% (100)% +

We recorded an income tax benefit of $125.4 million for the year ended December 31, 2020 and income tax expense of $0.3 million for the year ended December 31, 2019.

A full valuation allowance had been recorded against our net deferred tax balance as of December 31, 2019 as it had been 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.

During the year ended December 31, 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 $126.6 million are realizable and, therefore, we reduced the valuation allowance accordingly.

For more information, see Note 16, Income Taxes , to our consolidated financial statements included herein.

The income tax expense for the year ended December 31, 2019 consisted primarily of $1.1 million of state income taxes in jurisdictions where the availability of carryforward losses are either limited or fully utilized as well as $1.0 million of state taxes on the one-time gain from the deemed sale of assets resulting from a tax election pursuant to Internal Revenue Code (IRC) Section 338(g) made by us related to the MyoScience Acquisition.

This was partially offset by a $1.8 million reduction in our valuation allowance on our deferred tax assets due to the MyoScience Acquisition.

No federal taxes resulted from the tax election given there were sufficient NOL carryforwards.

Liquidity and Capital Resources

Since our inception in 2006, we have devoted most of our cash resources to manufacturing, research and development and selling, general and administrative activities related to the development and commercialization of EXPAREL.

In addition, we acquired iovera° as part of the MyoScience Acquisition in April 2019.

We are highly dependent on the commercial success of EXPAREL.

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 December 31, 2020, we had an accumulated

We recorded income tax expense of $14.4 million for the year ended December 31, 2021 and an income tax benefit of $125.4 million for the year ended December 31, 2020.

The effective tax rate of 26% for the year ended December 31, 2021 differed from the U.S.

statutory tax rate of 21% due to non-deductible expenses and valuation allowances recorded against capital loss carryforwards, partially offset by stock-based compensation deductions and tax credits.

The income tax benefit for the year ended December 31, 2020 represented the full release of a $126.6 million valuation allowance on net domestic deferred assets as we determined that there was sufficient positive evidence to conclude that it was more likely than not that domestic deferred taxes were realizable.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page 74

deficit of $253.9 million, cash and cash equivalents, short-term and long-term investments of $617.1 million and working capital of $398.3 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 to retire $185.0 million in aggregate principal (including accrued interest) of our existing 2022 Notes.

Table of Contents ,

Liquidity and Capital Resources

In addition, we acquired ZILRETTA as part of the Flexion Acquisition in November 2021 and iovera° as part of the MyoScience Acquisition in April 2019.

We are primarily dependent on the commercial success of EXPAREL and ZILRETTA.

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

As of December 31, 2021, we had an accumulated deficit of $211.9 million, cash and cash equivalents and short-term available-for-sale investments of $656.4 million and working capital of $344.9 million.

The net cash proceeds from the Term Loan was $359.2 million after deducting fees and financing costs.

For more information, see Note 11, Debt , to our 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.

The COVID-19 pandemic could continue to result in a reduction of certain commercial and clinical expenditures which could offset a portion of the potential revenue declines caused by the COVID-19 pandemic.

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.

In March 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 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.

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 and remitted $1.4 million in December 2021.

The remaining $1.4 million is due by December 31, 2022.

Summary of Cash Flows

6 unchanged sentences

Financing activities 380,694 222,304

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

Net increase in cash and cash equivalents $ 485,621 $ 21,729

Operating Activities

In 2021, net cash provided by operating activities was $125.7 million compared to $77.0 million in 2020.

The increase of $6.5 million was primarily attributable to the increase in income from operations driven by the increase in revenue and reductions in research and development and selling, general and administrative expenses—reflecting reduced spending due to the COVID-19 pandemic and a decline in sales commissions.

These increases were partially offset by an increase in overall working capital requirements, and contingent consideration payments made to MyoScience securityholders, $9.4 million of which were classified as operating.

The increase of $48.7 million was primarily attributable to a 26% increase in total revenues, which was partially offset by expenditures related to the Flexion Acquisition including severance, legal fees and third-party services.

For more information, see Note 18, Acquisition-Related Charges, Product Discontinuation and Other, to our consolidated financial statements.

In addition, in 2021 there were contingent consideration payments to MyoScience securityholders of $12.0 million, of which $6.8 million has been classified as an operating cash outflow and $5.2 million as a financing cash outflow.

Investing Activities

In 2021, net cash used in investing activities was $20.8 million, which was primarily driven by the $420.0 million cash portion of the purchase price consideration, net of cash received, associated with the Flexion Acquisition and $45.9 million of capital expenditures, largely for equipment for our new 200-liter EXPAREL capacity expansion project at our Science Center Campus in San Diego, California.

These uses of cash were partially offset by the net sale of available-for-sale investments of $457.2 million to fund the cash portion of the purchase price consideration associated with the Flexion Acquisition.

In 2020, net cash used in investing activities was $277.6 million, which reflected $238.6 million of short-term and long-term investment purchases (net of maturities) and purchases of fixed assets of $37.8 million.

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

In addition, we made a $1.2 million equity investment in GeneQuine.

In 2019, net cash used in investing activities was $128.5 million, which reflected cash used to fund the MyoScience Acquisition of $117.7 million (net of $1.3 million of cash acquired), purchases of fixed assets of $10.2 million and an additional $1.6 million investment in TELA Bio, partially offset by $1.0 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 England and facility upgrades at our Science Center Campus.

Major fixed asset purchases included equipment for the new 200-liter EXPAREL capacity expansion project at our Science Center Campus and expenditures for expanding our EXPAREL manufacturing capacity in Swindon, England.

In addition, we made a $1.2 million equity investment.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page 75

Table of Contents ,

Financing Activities

In 2021, net cash provided by financing activities was $380.7 million, which consisted of net proceeds from the Term Loan of $359.2 million, the exercise of stock options of $23.8 million and $2.8 million from the issuance of shares through our ESPP.

We also made contingent consideration payments to MyoScience securityholders, of which $5.2 million was classified as financing activities based on the recognition at the time of the MyoScience Acquisition.

In 2020, net cash provided by financing activities was $222.3 million, which consisted of gross proceeds from the issuance of the 2025 Notes of $402.5 million, the exercise of stock options of $45.2 million and $2.5 million from the issuance of shares through our ESPP.

In conjunction with the issuance of the 2025 Notes, we paid $211.1 million of cash (including $1.2 million of accrued interest classified as an operating outflow) to retire $185.0 million of our 2022 Notes in privately negotiated transactions and $12.5 million in financing costs.

We also made contingent consideration payments to MyoScience

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page 67

securityholders, of which $5.6 million was classified as financing activities based on their recognition at the time of the MyoScience Acquisition.

In 2019, net cash provided by financing activities was $3.7 million, which consisted of proceeds from the exercise of stock options of $8.5 million and $2.4 million from the issuance of shares through our ESPP.

We also made a $6.6 million contingent consideration payment to MyoScience securityholders and a $0.6 million payment to retire our 3.25% convertible senior notes due 2019.

We also made contingent consideration payments to MyoScience securityholders, of which $5.6 million was classified as financing activities based on their recognition at the time of the MyoScience Acquisition.

Equity Financings

From our inception through December 31, 2021, we have raised $344.5 million of net proceeds from the sale of common stock and other equity securities via public offerings.

2026 Term Loan B Facility

In December 2021, we entered into the $375.0 million Term Loan which is secured by substantially all of the Company’s and any subsidiary guarantor’s assets and is scheduled to mature on December 7, 2026, subject to certain exceptions set forth in the Credit Agreement.

The Company may elect to borrow either alternate base rate borrowings or term benchmark borrowings.

Each term loan borrowing which is an alternate base rate borrowing bears interest at a variable rate per annum equal to the Alternate Base Rate (as defined in the Credit Agreement) subject to a 1.75% floor, plus 6.00%.

Each term loan borrowing which is a term benchmark borrowing bears interest at a variable rate per annum equal to (i) the Adjusted Term SOFR Rate (as defined in the Credit Agreement) subject to a 0.75% floor plus (ii) 7.00%.

The Credit Agreement requires us to, among other things, maintain (i) a first lien net leverage ratio, determined as of the last day of any fiscal quarter, of no greater than 1.75 to 1.00 and (ii) liquidity, at any time, of at least $150.0 million.

The Credit Agreement also contains customary affirmative and negative covenants, financial covenants, representations and warranties, events of default and other provisions.

As of December 31, 2021, the Company was in compliance with all financial covenants under the Credit Agreement.

At December 31, 2021, we had $375.0 million in outstanding borrowings under the Term Loan.

As a result of our entry into the Term Loan, we expect our interest to increase in 2022.

See Note 11, Debt , to our consolidated financial statements included herein for further discussion of the Term Loan.

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 the 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 with respect to the 2025 Notes.

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

The 2025 Notes mature on August 1, 2025.

At December 31, 2020, the outstanding principal amount of 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.

Upon conversion, holders will receive the principal amount of their 2025 Notes and any excess conversion value.

For both the principal and excess conversion value, holders may receive cash, shares of our common stock or a combination of cash and shares of our common stock, at our option.

The initial conversion rate for the 2025 Notes is 13.9324 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of approximately $71.78 per share of our common stock.

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

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.

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

While the 2025 Notes are currently classified on our consolidated balance sheet at December 31, 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.

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.

See Note 11, Debt , to our consolidated financial statements included herein for further discussion of the 2025 Notes.

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

See Note 11, Debt , to our consolidated financial statements included herein for further discussion of the 2025 Notes, including information on convertibility factors, redemption, timeframes and balance sheet classification.

2024 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 the 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.

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.

At December 31, 2020, the outstanding principal amount of the 2022 Notes was $160.0 million.

On or after October 1, 2021, until the close of business on the second scheduled trading day immediately preceding April 1, 2022, holders may convert their 2022 Notes at any time.

Upon conversion, holders will receive the principal amount of their

In November 2021, as part of the Flexion Acquisition, we assumed $201.3 million in aggregate principal amount of the Flexion 2024 Notes.

The Flexion 2024 Notes have a maturity date of May 1, 2024, are unsecured, and accrue interest at a rate of 3.375% per annum, payable semi-annually on May 1 and November 1 of each year.

At December 31, 2021, the outstanding principal on the Flexion 2024 Notes was $201.3 million.

In January 2022, we repurchased $192.6 million aggregate principal amount of the Flexion 2024 Notes.

See Note 11, Debt , to our consolidated financial statements included herein for further discussion of the Flexion 2024 Notes.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page 76

2022 Notes and any excess conversion value.

For both the principal and excess conversion value, holders may receive cash, shares of our common stock or a combination of cash and shares of our common stock, at our option.

The initial conversion rate for the 2022 Notes is 14.9491 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of approximately $66.89 per share of our common stock.

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

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

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 December 31, 2020.

See Note 11, Debt , to our consolidated financial statements included herein for further discussion of the 2022 Notes.

Table of Contents ,

2022 Convertible Senior Notes

In March 2017, we completed a private placement of $345.0 million in aggregate principal amount of our 2022 Notes and entered into an 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, and since October 1, 2020, holders may convert their 2022 Notes at any time.

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.

At December 31, 2021, the outstanding principal on the 2022 Notes was $160.0 million and we intend to repay the principal with cash on hand upon maturity on April 1, 2022.

See Note 11, Debt , to our consolidated financial statements included herein for further discussion of the 2022 Notes, including information on convertibility factors, redemption, timeframes and balance sheet classification.

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 remaining principal on any conversions of the 2022 Notes and 2025 Notes and to service our indebtedness through at least February 26, 2022.

We believe that our existing cash and cash equivalents, available-for-sale investments and cash received from product sales will be sufficient to enable us to fund our operating expenses, capital expenditure requirements and payment of the interest and principal on our Term Loan and our Notes, and any conversions of our Notes through the next 12 months.

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

• 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 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 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 up to $10.0 million to be paid in the first half of 2021;

• 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 costs of successfully integrating Flexion into our existing business and expanding the commercialization of ZILRETTA;

• the cost and timing of the potential Flexion milestone payments under the CVR Agreement, which could be up to an aggregate of $425.5 million if certain regulatory and commercial milestones are met (See Note 5, Acquisitions , to our consolidated financial statements included herein for more information);

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

• the timing of and extent to which the holders of our Notes elect to convert their Notes and the timing of principal and interest payments on our Term Loan;

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

• the cost and timing of expanding and maintaining our manufacturing facilities, including the current EXPAREL capacity expansion project at our Science Center Campus in San Diego, California;

• the cost and timing of potential remaining milestone payments to MyoScience security holders, which could be up to an aggregate of $43.0 million if certain regulatory and commercial milestones are met (See Note 5, Acquisitions , to our condensed consolidated financial statements included herein for more information);

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

• the cost and timing of an early termination payment to DePuy Synthes, which we currently estimate to be up to $9.0 million;

• 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 iovera°;

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

• the costs for the development and commercialization of other product candidates;

• the costs and timing of future payments under our employee benefit plans, including but not limited to our cash long-term incentive plan and non-qualified deferred compensation plan;

• the extent to which we acquire or invest in products, businesses and technologies.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page 69

We may require additional debt or equity financing to meet our future operating and capital requirements.

We have no committed external sources of funds, and additional equity or debt financing may not be available on acceptable terms, if at all.

In particular, capital market disruptions or negative economic conditions, especially in light of the COVID-19 pandemic, may hinder our access to capital.

Contractual Obligations

The table below presents a summary of our contractual obligations as of December 31, 2020 (in thousands):

Payments Due by Period

Capital market disruptions or negative economic conditions, especially in light of the COVID-19 pandemic, may hinder our access to capital.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page 77

Table of Contents ,

Contractual Obligations

Total Less Than One Year 1-3 Years 3-5 Years More Than

Convertible senior notes - principal (2)

$ 562,500 $ — $ 160,000 $ 402,500 —

Convertible senior notes - interest 20,962 6,986 7,938 6,038 —

Lease obligations (3)

106,699 12,527 21,120 22,251 50,801

Purchase obligations (4)

41,547 25,166 16,381 — —

Achieved milestone payments (1)

10,000 10,000 — — —

Total $ 741,708 $ 54,679 $ 205,439 $ 430,789 50,801

(1) This table does not include potential future 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, including $32.0 million when annual net sales of DepoBupivacaine products collected, including EXPAREL, reach $500.0 million (measured on a rolling quarterly basis) and $4.0 million upon the first commercial sale in the United Kingdom, France, Germany, Italy or Spain.

This contingency is described further in Note 9 , Goodwill and Intangible Assets , to our consolidated financial statements included herein.

This table also does not include potential future milestone payments to MyoScience shareholders which could be up to an aggregate of $48.0 million if certain regulatory and commercial milestones are met.

However, the table above includes one achieved milestone payment totaling $10.0 million scheduled to be paid in the first half of 2021.

The table also does not include potential investments of $4.9 million to be made under an investment agreement and convertible loan agreement if certain milestones are met by GeneQuine.

Further, this table does not include various agreements that we have entered into for services with third-party vendors, including agreements to conduct clinical trials, and for consulting and other contracted services due to the cancellable nature of the services.

(2) The amounts represent the April 2022 maturity of our 2022 Notes and the August 2025 maturity of our 2025 Notes.

See Note 11 , Debt , to our consolidated financial statements included herein for further discussion.

Additionally, it excludes any conversion premium on the 2022 Notes and 2025 Notes, which may be settled in cash or stock at our discretion.

Neither the 2022 Notes nor the 2025 Notes were convertible as of December 31, 2020.

(3) The amounts consist of operating leases for our corporate headquarters in Parsippany, New Jersey, manufacturing, research and development and warehouse space in San Diego, California and Fremont, California and office space in Tampa, Florida.

In addition, the lease component for the use of the Thermo Fisher facility in Swindon, England under the Thermo Fisher Agreements has also been included.

(4) The amounts consist of minimum, non-cancelable contractual commitments for contract manufacturing services and raw materials.

In April 2014, we and Thermo Fisher entered into a Strategic Co-Production Agreement, a Technical Transfer and Service Agreement and a Manufacturing and Supply Agreement to collaborate in the manufacture of EXPAREL.

Under the terms of the Technical Transfer and Service Agreement, Thermo Fisher has agreed to undertake certain technical transfer activities and construction services needed to prepare its Swindon, England facility for the manufacture of EXPAREL in two dedicated manufacturing suites.

Under these agreements, we are required to make monthly base fee payments to Thermo Fisher.

Under the terms of the Manufacturing and Supply Agreement, following FDA approval of the first suite (which occurred in May 2018), we agreed to purchase EXPAREL product from Thermo Fisher.

Unless earlier terminated by giving notice of up to three years (other than termination by us in the event of a material breach by Thermo Fisher), this agreement will expire in May 2028.

We had three convertible senior notes outstanding as of December 31, 2021.

$160.0 million in aggregate principal amount is due on our 2022 Notes in April 2022, $8.7 million in aggregate principal amount is due on the Flexion 2024 Notes in May 2024, and $402.5 million in aggregate principal amount is due on our 2025 Notes in August 2025.

There was $201.5 million in aggregate principal amount of Flexion 2024 Notes outstanding as of December 31, 2021 of which $192.6 million in aggregate principal amount was repurchased on January 7, 2022 following an offer to purchase the Flexion 2024 Notes.

The remaining interest payments on our Notes is $17.9 million, of which an estimated $5.3 million is due in 2022.

We also have a $375.0 million Term Loan with contractually obligated principal payments of $28.1 million in 2022, $37.5 million in each of 2023 and 2024, $42.2 million in 2025 and $229.7 million in 2026.

The remaining interest payments on the our Term Loan is approximately $115.9 million, based on the current interest rate.

In the normal course of business, we enter into various lease agreements for manufacturing, research and development and corporate activities, which are typically classified as operating leases under the provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 842, Leases .

As of December 31, 2021, we had net minimum commitments of $104.2 million, of which $13.2 million is due in 2022.

In addition, we have approximately $ 50.3 million of minimum, non-cancelable contractual commitments for contract manufacturing services as of December 31, 2021, of which $18.5 million is due within one year, and the remaining $31.8 million is due within one to three years.

We have approximately $ 9.2 million of minimum, non-cancelable contractual commitments for the purchase of certain raw materials as of December 31, 2021, of which $4.7 million is due within one year, and the remaining $4.5 million is due within one to three years.

As part of the MyoScience Acquisition, upon the achievement of certain regulatory and commercial milestones, there are up to $ 43.0 million in potential milestone payments available as of December 31, 2021.

As part of the Flexion Acquisition there are up to $425.5 million in potential payments if all the regulatory and commercial milestones are met.

For more information, see Note 5, Acquisitions , to our consolidated financial statements included herein.

Critical Accounting Policies and Use of Estimates

1 unchanged sentence

The preparation of these financial statements requires us to make estimates that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported revenues and expenses during the reporting periods.

On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, contingent consideration, inventory costs, liabilities and accruals, clinical trial expenses, stock-based compensation and the valuation of deferred tax assets.

On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition, contingent consideration, purchase price adjustments, inventory costs, liabilities and accruals, clinical trial expenses, stock-based compensation and the valuation of deferred tax assets.

We base our estimates on historical experience, contract terms and on other factors we believe to be appropriate under the circumstances.

Actual results may differ from these estimates under different assumptions or conditions.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page 70

Our significant accounting policies are more fully discussed in Note 2, Summary of Significant Accounting Policies , to our consolidated financial statements included herein.

1 unchanged sentence

Revenue Recognition

Our sources of revenue include (i) sales of EXPAREL in the U.S.;

(ii) sales of iovera° in the U.S.;

(iii) sales of, and royalties on, sales of our bupivacaine liposome injectable suspension product for veterinary use in the U.S.

and (iv) license fees and milestone payments.

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

We do not consider revenue from sources other than sales of EXPAREL to be material sources of our consolidated revenue.

Net Product Sales

We sell EXPAREL through a drop-ship program under which orders are processed through wholesalers based on orders of the product placed by end-users, namely hospitals, ambulatory surgery centers and healthcare provider offices.

EXPAREL is delivered directly to the end-user without the wholesaler ever taking physical possession of the product.

Product revenue is recognized when control of the promised goods are transferred to the customers, in an amount that reflects the consideration we expect to be entitled to in exchange for transferring those goods.

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

Collaborative Licensing and Milestone Revenue

Our collaboration agreements generally involve licenses to our products.

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

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

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

If the license is expected to substantively change, the revenue is recognized over the license period.

Revenue recognition from milestone payments is dependent upon the facts and circumstances surrounding the milestone payments.

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

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

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

For milestone payments to be received upon the achievement of a sales threshold, the revenue from the milestone payments is recognized at the later of when the actual sales are incurred or the performance obligation to which the sales relate to has been satisfied.

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

These reserves are based on 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, 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.

The calculation of some of these items requires management to make estimates based on sales data, historical return data, contracts, statutory requirements and other related information that may become known in the future.

The adequacy of these provisions is reviewed on a quarterly basis.

If our assessments, experiences or judgments are not accurate estimates of future results, our results could be affected.

The sensitivity of our estimates varies by program.

Estimates associated with chargebacks and government programs have the greatest risk of being subject to adjustment because of the time delay between recording the accrual and the final settlement.

Historically, adjustments to these estimates to reflect actual results or updated expectations have not been material.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page 78

Table of Contents ,

The summary of activity with respect to our sales related allowances and accruals for the years ended December 31, 2021, 2020 and 2019 appears in Note 4, Revenue , to our consolidated financial statements included herein.

Contingent Consideration

1 unchanged sentence

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

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

In the absence of new information, changes in fair value reflect the impact of the passage of time towards the potential achievement of the milestones.

The following table includes the key assumptions used in the valuation of our contingent consideration milestones:

Assumption Flexion Ranges Utilized as of

December 31, 2021 MyoScience Ranges Utilized as of

December 31, 2021

Discount rates 11.39 % to 12.92 %

11.42 % to 12.13 %

Probability of achieving regulatory milestones 10.00 % to 15.00 %

Projected year of achieving regulatory milestones 2026 to 2028

The maximum remaining potential payments related to contingent consideration from the Flexion Acquisition and MyoScience Acquisition are $ 425.5 million and $ 43.0 million, respectively, as of December 31, 2021.

Small changes to these assumptions may result in a material impact to the calculated amounts.

Additionally, the forecasted revenue annual growth rates are key assumptions in the contingent consideration valuations associated with our commercial milestones.

The impact of a hypothetical 10 percent increase in the forecasted annual growth rates would have increased the value of our contingent consideration liability as of December 31, 2021 by $10.1 million.

Purchase Price Accounting

Upon an acquisition, we determine the fair value of the assets acquired and liabilities assumed on the date of acquisition, which may include a significant amount of intangible assets, as well as goodwill.

When determining the fair values of the acquired intangible assets, we consider, among other factors, analyses of historical financial performance and an estimate of the future performance of the acquired business.

The fair values of the acquired intangible assets are primarily calculated using an income approach that relies on discounted cash flows.

This method is computed utilizing a forecast of the expected future net cash flows for the asset adjusted to present value by applying a discount rate that reflects the risk factors associated with the net cash flows.

We consider this approach to be the most appropriate valuation technique because the inherent value of an acquired intangible asset is its ability to generate future income.

In a typical acquisition, we engage a third-party valuation expert to assist us with the fair value analyses for acquired intangible assets.

Determining the fair values of acquired intangible assets requires us to exercise significant judgment.

We select reasonable estimates and assumptions based on evaluating a number of factors, including, but not limited to, marketplace participants, consumer awareness and brand history.

Additionally, there are significant judgments inherent in discounted cash flows such as estimating the amount and timing of projected future cash flows and the discount rates.

Regarding the Flexion Acquisition, the following assumptions were utilized to determine the fair value of our ZILRETTA product:

Assumption Flexion Acquisition Ranges Utilized as of December 31, 2021

Range of discount rates 17.5% - 18.0%

Forecasted annual sales growth rate 0.0% - 50.0%

Small changes to these assumptions may result in a material impact to the calculated amounts.

Recent Accounting Pronouncements

See Note 3, Recent Accounting Pronouncements , to our consolidated financial statements for further discussion of recent accounting pronouncements.

Off-Balance Sheet Arrangements

We do not have any material off-balance sheet arrangements as of December 31, 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.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page 79

Table of Contents ,

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis