What changed in this filing

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Item 9A. Controls and Procedures

2022-02-28 compared with 2021-03-01 · 786 added, 461 removed, 1170 unchanged (52% of the section changed)

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

On November 19, 2021, we acquired Flexion (now Pacira Therapeutics, Inc., or Pacira Therapeutics).

As such, the scope of our assessment of the effectiveness of our disclosure controls and procedures did not include the internal controls over

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financial reporting of Pacira Therapeutics.

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

Pacira Therapeutics (excluding goodwill and intangible assets, which are included within the scope of the assessment) accounted for 13% of our total assets and 2% of our total revenue as of and for the year ended December 31, 2021.

Based on their evaluation as of December 31, 2021, our Chief Executive Officer and Chairman and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2021.

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Changes in Internal Control over Financial Reporting

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

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

As a result of the Flexion Acquisition, we have commenced a project to evaluate the processes and procedures of Pacira Therapeutics’ internal control over financial reporting into our internal control over financial reporting framework.

Except for the activities described above, there have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2021 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2021and 2020, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements), and our report dated February 28, 2022 expressed an unqualified opinion on those consolidated financial statements.

The Company acquired Flexion Therapeutics, Inc.

during 2021, and management excluded from its assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, 2021, Flexion Therapeutics, Inc.’s internal control over financial reporting associated with total assets of 13% (excluding goodwill and intangible assets, which are included in the scope of the assessment) and total revenues of 2% included in the consolidated financial statements of the Company as of and for the year ended December 31, 2021.

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

Basis for Opinion

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Other Information

Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers and Corporate Governance

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

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

Securities Authorized For Issuance Under Equity Compensation Plans

The following table sets forth certain information, as of December 31, 2021, concerning shares of our common stock authorized for issuance under our equity compensation plans.

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

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

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

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

Weighted Average Exercise Price of Outstanding

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

Equity compensation plans approved by stockholders (3)

6,020,510 $ 49.25 2,006,246

Equity compensation plans not approved by stockholders (3)

30,030 $ 64.21 138,924

Total equity compensation plans 6,050,540 $ 49.32 2,145,170

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

(2) Does not include 955,277 unvested shares outstanding as of December 31, 2021 in the form of restricted stock units under our 2011 Plan, which do not require the payment of any consideration by the recipients.

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

Other information required by this item will be included in the proxy statement for our 2022 annual stockholders’ meeting and is incorporated by reference into this report.

Certain Relationships and Related Transactions, and Director Independence

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Exhibits, Financial Statement Schedules

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(1) Financial Statements

Report of Independent Registered Public Accounting Firm

Consolidated Balance Sheets

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Notes to Consolidated Financial Statements

The report of our independent registered accounting firm, KPMG LLP, with respect to the above-referenced financial statements and their report on internal control over financial reporting are included in this Form 10-K.

Their consent appears as Ex hibit 23.1 of this Form 10-K.

Report of Registered Independent Accounting Firm on the Consolidated Financial Statements

Report of Registered Independent Accounting Firm on Internal Control over Financial Reporting

(2) Schedules

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EXHIBIT INDEX

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# † 8-K 2.1 3/5/2019

Agreement and Plan of Merger, dated as of October 11, 2021, by and among Flexion Therapeutics, Inc., Pacira BioSciences, Inc.

and Oyster Acquisition Company Inc.

8-K 2.1 10/12/2021

Amended and Restated Certificate of Incorporation.

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8-K 4.1 3/13/2017

Indenture (including form of 3.375% Convertible Senior Notes due 2024), dated as of May 2, 2017, by and between Flexion Therapeutics, Inc.

and Wells Fargo Bank, National Association, as trustee .*

First Supplemental Indenture, dated as of November 19, 2021, by and between Flexion Therapeutics, Inc.

and Wells Fargo Bank, National Association, as trustee.

Description of Securities.

10-K 4.3 2/21/2020

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

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

Amended and Restated 2011 Stock Incentive Plan.*** 8-K 10.1 6/11/2021

Form of Nonstatutory Stock Option Agreement under the Amended and Restated 2011 Stock Incentive Plan for grants made prior to February 1, 2022.*** 8-K 10.3 6/4/2014

Form of Nonstatutory Stock Option Agreement (Employees) under the Amended and Restated 2011 Stock Incentive Plan for grants made on or after February 1, 2022.* ***

Form of Nonstatutory Stock Option Agreement (Non-Employee Directors) under the Amended and Restated 2011 Stock Incentive Plan for grants made on or after February 1, 2022.* ***

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

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

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Incorporation By Reference From

Number Description Form Exhibit Date

Amendment No.

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

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Incorporation By Reference From

Number Description Form Exhibit Date

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

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

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

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

10-Q 10.1 5/3/2018

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

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

Contingent Value Right Agreement, dated as of November 19, 2021, by and between Pacira BioSciences, Inc.

and American Stock Transfer & Trust Company, LLC.

8-K 10.1 11/19/2021

Credit Agreement, dated as of December 7, 2021, by and among Pacira BioSciences, Inc., the lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent.## 8-K 10.1 12/9/2021

Manufacturing and Supply Agreement dated July 31, 2015, between Flexion Therapeutics, Inc.

and Patheon UK Limited, as amended to date.††

Technical Transfer and Service Agreement dated July 31, 2015, between Flexion Therapeutics, Inc.

and Patheon UK Limited, as amended to date.††

Side Letter to the Manufacturing and Supply Agreement between Flexion Therapeutics, Inc.

and Patheon UK Limited, dated as of April 8, 2020.††

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Incorporation By Reference From

Number Description Form Exhibit Date

Subsidiaries of the Registrant.*

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

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* Filed herewith.

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The Company hereby undertakes to supplementally furnish copies of any omitted schedules to the Securities and Exchange Commission upon request.

## Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K.

The Company hereby undertakes to supplementally furnish copies of any omitted schedules and exhibits to the Securities and Exchange Commission upon request.

Form 10-K Summary

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Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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Reinhart, III

/s/ LAUREN RIKER Vice President, Finance

/s/ LAUREN RIKER Senior Vice President, Finance

(Principal Accounting Officer) February 28, 2022

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PACIRA BIOSCIENCES, INC.

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Report of Independent Registered Public Accounting Firm

Auditor Name:

Auditor Location:

Short Hills, NJ

Auditor Firm ID:

Consolidated Balance Sheets as of December 31, 2021 and 2020

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company’s internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission, and our report dated February 28, 2022 expressed an unqualified opinion on the effectiveness of the Company’s internal control over financial reporting.

Change in Accounting Principle

As discussed in Note 3 to the consolidated financial statements, the Company has changed its method of accounting for leases as of January 1, 2019 due to the adoption of Accounting Standards Update 2016-02, Leases (Topic 842).

Basis for Opinion

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

Critical Audit Matter

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

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

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

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

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

was $28.3 million as of December 31, 2020.

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

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

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

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

as a critical audit

Critical Audit Matters

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

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

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

Initial fair value measurement of intangible assets acquired in connection with the acquisition of

Flexion Therapeutics, Inc.

As discussed in Notes 5 and 9 to the consolidated financial statements, the Company acquired Flexion Therapeutics, Inc.

(Flexion) on November 19, 2021 for consideration of approximately $578.8 million.

The Company measured the assets acquired and the liabilities assumed at fair value, which resulted in the recognition of $541.0 million of intangible assets, comprised of $480.0 million of developed technology and $61.0 million of in-process research and development.

We identified the evaluation of the initial fair value measurement of the developed technology and in-process research and development intangible assets acquired in connection with the acquisition of Flexion as a critical audit matter.

Evaluating the initial fair value measurement of those intangible assets was complex and required significant auditor judgment due to the high degree of subjectivity in evaluating certain assumptions used to estimate fair value.

In particular, the fair value measurement was sensitive to management’s forecasts of revenue and the discount rate.

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

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addition, the audit effort associated with the evaluation of the Company’s discount rate involved the use of valuation professionals with specialized skills and knowledge.

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

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

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

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

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

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

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s acquisition-date valuation process, including controls related to the development of assumptions for forecasted revenues and discount rate.

We performed sensitivity analyses over the forecasted revenues to assess the impact of changes in that assumption on the Company’s determination of the fair value of the developed technology and in-process intangible assets.

We evaluated the future revenue growth rates used by the Company to determine forecasted revenues, by comparing them to industry data that was assessed to be relevant and reliable.

We involved valuation professionals with specialized skills and knowledge, who assisted in evaluating the Company's discount rate assumption, by comparing the inputs to that assumption to publicly available market data, and assessing the resulting discount rate.

Fair value measurement of the contingent consideration liabilities associated with the acquisitions of Flexion Therapeutics, Inc.

and MyoScience, Inc.

As discussed in Notes 5 and 12 to the consolidated financial statements, the Company recognized contingent consideration liabilities at their estimated fair value on the acquisition date, in connection with applying the acquisition method of accounting for business combinations.

Subsequent changes to the fair value of the contingent consideration liabilities were recorded in the consolidated statement of operations in the period of change.

The initial fair value of the contingent consideration liability related to the acquisition of Flexion was $45.2 million.

The fair value of the Flexion and MyoScience, Inc.

(MyoScience) contingent consideration as of December 31, 2021 was $46.4 million and $11.2 million, respectively.

We identified the evaluation of the fair value measurement of the contingent consideration liabilities related to achieving commercial and regulatory milestones associated with the acquisitions of Flexion and MyoScience as a critical audit matter.

Evaluating the fair value measurement of the contingent consideration liabilities required significant auditor judgment, due to the high degree of subjectivity inherent in certain assumptions with unobservable inputs that were used in the simulation model.

In particular, the fair value measurement was sensitive to management’s forecasts of revenues, estimated probabilities and timing related to the achievement of certain commercial and regulatory milestones, volatility, and discount rates.

In addition, the audit effort associated with the evaluation of the Company’s volatility and discount rates involved the use of valuation professionals with specialized skills and knowledge.

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

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

This included controls related to the development of the assumptions for forecasted revenues, estimated probabilities and timing related to the achievement of certain milestones, volatility, and discount rates.

We evaluated the forecasted revenue and certain commercial and regulatory milestone assumptions used in the Company’s models by comparing them to industry benchmarks and other third-party market data that were assessed to be relevant and reliable.

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

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

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PACIRA BIOSCIENCES, INC.

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Cash and cash equivalents $ 585,578 $ 99,957

Short-term investments 421,705 213,722

Short-term available-for-sale investments 70,831 421,705

Accounts receivable, net 96,318 53,046

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Total current assets 866,048 651,623

Long-term investments 95,459 64,798

Long-term available-for-sale investments — 95,459

Fixed assets, net 188,401 136,688

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Deferred tax assets 153,364 106,164

Equity investments and other assets 14,019 10,971

Investments and other assets 21,987 14,019

Total assets $ 2,075,353 $ 1,274,513

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Lease liabilities 7,891 7,425

Convertible senior notes 149,648 —

Convertible senior notes, net 350,466 149,648

Contingent consideration — 14,736

Current portion of long-term debt, net 24,234 —

Income taxes payable 429 114

Total current liabilities 521,118 253,328

Convertible senior notes 313,030 306,045

Convertible senior notes, net 339,267 313,030

Lease liabilities 71,727 71,025

Deferred revenue 10,125 —

Long-term debt, net 335,263 —

Contingent consideration 57,598 13,610

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250,000,000 shares authorized;

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

41,908,148 shares issued and outstanding at December 31, 2019

44,734,308 and 43,636,929 shares issued and outstanding at December 31, 2021 and 2020, respectively

Additional paid-in capital 942,091 873,201

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PACIRA BIOSCIENCES, INC.

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Net product sales $ 538,966 $ 426,614 $ 418,926

Collaborative licensing and milestone revenue — — 3,000

Royalty revenue 2,442 3,033 2,100

Collaborative licensing and milestone revenue 125 — —

Total revenues 541,533 429,647 421,026

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Income (loss) before income taxes 56,404 20,089 ( 10,748 )

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

Income tax (expense) benefit ( 14,424 ) 125,434 ( 268 )

Net income (loss) $ 41,980 $ 145,523 $ ( 11,016 )

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PACIRA BIOSCIENCES, INC.

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(In thousands)

Stock Additional

Common Stock Additional

Capital Accumulated

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(Note 3) — — — ( 156 ) — ( 156 )

Cumulative effect adjustment of the adoption

of Accounting Standards Update 2018-07

(Note 3) — — ( 20 ) 20 — —

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

Vested restricted stock units 193 — — — — —

Shares issued under employee stock

purchase plan 65 — 1,784 — — 1,784

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

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

Net loss — — — ( 471 ) — ( 471 )

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

Cumulative effect adjustment of the adoption

of Accounting Standards Update 2016-02

(Note 3) — — — ( 156 ) — ( 156 )

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

Vested restricted stock units 193 — — — — —

Shares issued under employee stock

Common stock issued under employee stock

purchase plan 67 — 2,402 — — 2,402

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Vested restricted stock units 239 — — — — —

Shares issued under employee stock

Common stock issued under employee stock

purchase plan 62 — 2,546 — — 2,546

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

Exercise of stock options 732 1 23,833 — — 23,834

Vested restricted stock units 310 — — — — —

Common stock issued under employee stock

purchase plan 55 — 2,811 — — 2,811

Stock-based compensation — — 42,246 — — 42,246

Other comprehensive loss (Note 13) — — — — ( 151 ) ( 151 )

Net income — — — 41,980 — 41,980

Balance at December 31, 2021 44,734 $ 45 $ 942,091 $ ( 211,895 ) $ 167 $ 730,408

See accompanying notes to consolidated financial statements.

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Depreciation of fixed assets and amortization of intangible assets 28,548 19,908 19,576

Amortization of unfavorable lease obligation and debt issuance costs 2,156 1,707 1,590

Amortization of debt issuance costs 2,754 2,156 1,707

Amortization of debt discount 23,152 18,254 13,746

Loss on disposal and impairment of fixed assets 22 1,010 65

(Gain) loss on disposal and impairment of fixed assets ( 10 ) 22 1,010

Loss on early extinguishment of debt — 8,071 —

Stock-based compensation 42,246 39,920 33,650

Changes in contingent consideration (after MyoScience, Inc.

acquisition) 5,204 16,672 —

Changes in contingent consideration (after an acquisition) ( 989 ) 5,204 16,672

(Gain) loss on investment (net of stock dividend) and other non-operating income, net 2,673 ( 1,618 ) 4,315

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

acquisition):

Changes in operating assets and liabilities (net of acquisitions):

Accounts receivable, net ( 10,434 ) ( 5,516 ) ( 8,524 )

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Other liabilities ( 229 ) ( 2,467 ) ( 6,726 )

Payment of contingent consideration to MyoScience, Inc.

securityholders ( 9,409 ) ( 370 ) —

Payment of contingent consideration ( 6,835 ) ( 9,409 ) ( 370 )

Deferred revenue 125 — —

Net cash provided by operating activities 125,717 77,032 70,520

Investing activities:

Acquisition of Flexion Therapeutics, Inc.

(net of cash acquired) ( 420,042 ) — —

Acquisition of MyoScience, Inc.

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Purchases of fixed assets ( 45,866 ) ( 37,801 ) ( 10,159 )

Purchases of investments ( 546,516 ) ( 318,484 ) ( 363,255 )

Sales of investments 307,870 319,468 405,188

Purchases of available-for-sale investments ( 611,488 ) ( 546,516 ) ( 318,484 )

Sales of available-for-sale investments 1,068,736 307,870 319,468

Payment of contingent consideration ( 4,000 ) — —

Equity investment ( 1,160 ) ( 1,622 ) —

Net cash (used in) provided by investing activities ( 277,607 ) ( 128,488 ) 20,576

Sale of equity investment 9,057 — —

Purchases of equity and debt investments ( 17,187 ) ( 1,160 ) ( 1,622 )

Net cash used in investing activities ( 20,790 ) ( 277,607 ) ( 128,488 )

Financing activities:

Proceeds from exercises of stock options 23,844 45,218 8,469

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

Proceeds from common stock issued under employee stock purchase plan 2,811 2,546 2,402

Proceeds from term loan B credit facility 363,750 — —

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

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Payment of debt issuance and financing costs ( 4,546 ) ( 12,487 ) —

Payment of contingent consideration to MyoScience, Inc.

securityholders ( 5,591 ) ( 6,630 ) —

Payment of contingent consideration ( 5,165 ) ( 5,591 ) ( 6,630 )

Net cash provided by financing activities 380,694 222,304 3,670

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PACIRA BIOSCIENCES, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

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Pacira BioSciences, Inc.

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.

and its subsidiaries (collectively, the “Company” or “Pacira”) is the industry leader in its 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.

The Company’s long-acting, local analgesic, EXPAREL ® (bupivacaine liposome injectable suspension), was commercially launched in the United States, or U.S., in April 2012 and approved in select European countries and the United Kingdom in November 2021.

EXPAREL utilizes the Company’s proprietary multivesicular liposome, or pMVL, drug delivery technology that encapsulates drugs without altering their molecular structure, and releases them over a desired period of time.

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

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

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

Novel Coronavirus (COVID-19) Pandemic

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

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

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

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

On November 19, 2021, the Company acquired Flexion Therapeutics, Inc., or Flexion, and added ZILRETTA ® (triamcinolone acetonide extended-release injectable suspension) to its product portfolio.

ZILRETTA is the first and only extended-release, intra-articular (meaning in the joint) injection indicated for the management of osteoarthritis, or OA, knee pain.

For more information, see Note 5, Acquisitions .

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 three products, reliance on a limited number of wholesalers, 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.

Coronavirus (COVID-19) Pandemic

Since early 2020, the Company’s revenues have been impacted by the global pandemic caused by a novel strain of coronavirus (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.

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

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

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These consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or GAAP, and in accordance with the rules and regulations of the United States Securities and Exchange Commission, or SEC.

The accounts of wholly owned subsidiaries are included in these consolidated financial statements.

The accounts of the Company’s wholly owned subsidiaries are included in these consolidated financial statements.

All intercompany balances and transactions have been eliminated in consolidation.

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

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

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

Because of the uncertainty of factors surrounding the estimates or judgments used in the preparation of the consolidated financial statements, actual results could differ from these estimates.

Revenue From Contracts With Customers

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.;

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

and (iv) license fees and milestone payments.

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

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

Estimates are used for, among other things, revenue recognition, purchase price allocation, stock-based compensation, inventory costs, impairments of equity investments, long-lived assets, goodwill, liabilities and accruals, including contingent consideration,

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

convertible senior notes, and the valuation of deferred tax assets.

Because of the uncertainty of factors surrounding the estimates or judgments used in the preparation of the consolidated financial statements, actual results could differ from these estimates.

Revenue From Contracts With Customers

The Company’s sources of revenue include (i) sales of EXPAREL in the U.S., European Union, or E.U.

and the United Kingdom, or U.K.;

(ii) sales of ZILRETTA in the U.S.;

(iii) sales of iovera° in the U.S., and Canada;

(iv) sales of, and royalties on, its bupivacaine liposome injectable suspension, including for veterinary use and (v) license fees and milestone payments.

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

Collaborative Licensing and Milestone Revenue

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The Company also sells EXPAREL directly to ambulatory surgery centers and physicians.

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

The Company sells ZILRETTA primarily to specialty distributors and a specialty pharmacy, who then subsequently resell ZILRETTA to physicians, clinics and certain medical centers or hospitals.

The Company also contracts directly with healthcare providers and intermediaries such as Group Purchasing Organizations, or GPOs.

The Company sells its bupivacaine liposome injectable suspension for veterinary use to a third-party licensee in the U.S.

and sells iovera° directly to end users.

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

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Total 85 % 87 % 89 %

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-11

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Revenue from outside the U.S.

accounted for less than 1 % of the Company’s total revenue for the year ended December 31, 2021.

The Company began selling EXPAREL in the E.U.

and iovera° in Canada in the fourth quarter of 2021.

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

during the years ended December 31, 2020 and 2019.

Revenue from outside the U.S.

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

Research and Development Expenses

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

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| 2020 Form 10-K | Page F-11

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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The dividend yield on the Company’s common stock is estimated to be zero as the Company has not declared or paid any dividends since inception, nor does it have any intention to do so in the foreseeable future.

The Company records forfeitures as they occur rather than estimating forfeitures during each period.

Additionally, the Company’s ability to declare and pay a dividend in the future could be limited per the agreements governing its indebtedness.

The Company records forfeitures as they occur rather than estimating forfeitures during each reporting period.

Cash and Cash Equivalents

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

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

As of December 31, 2021, the carrying value of money market funds was $ 223.0 million, commercial paper was $ 19.0 million and asset backed securities was $ 2.6 million.

As of December 31, 2020, the carrying value of money market funds was $ 51.8 million and commercial paper was $ 6.5 million.

The carrying values approximate fair value as of December 31, 2021 and 2020.

Short-Term and Long-Term Investments

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

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| 2021 Form 10-K | Page F-12

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Short-Term and Long-Term Available-For-Sale Investments

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

(and denominated in the U.S.

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

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

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

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

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

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| 2020 Form 10-K | Page F-12

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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The incremental borrowing rate is based on the rate the Company estimates it would pay on a collateralized basis over a similar term in a similar economic environment.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-13

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

In a business combination, the acquisition method of accounting requires that the assets acquired and liabilities assumed be recorded as of the date of the acquisition at their respective fair values, with some exceptions.

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

Acquired in-process research and development, or IPR&D, is recognized at fair value and initially characterized as an indefinite-lived intangible asset, irrespective of whether the acquired IPR&D has an alternative future use.

If the acquired net assets do not constitute a business under the acquisition method of accounting, the transaction is accounted for as an asset acquisition and no goodwill is recognized.

In an asset acquisition, the amount allocated to acquired IPR&D with no alternative future use is recorded as an expense at the acquisition date.

Any excess of the purchase price (consideration transferred) over the estimated fair values of net assets acquired is recorded as goodwill.

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

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| 2020 Form 10-K | Page F-13

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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Equity Investments

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

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

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

The Company holds investments in equity securities without a readily determinable fair value.

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

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

Impairment of Long-Lived Assets

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

The difference between the initial proceeds from the convertible debt issuance and the fair value of the liability component is recorded as the carrying amount of the equity component.

The difference between the initial proceeds

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PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

from the convertible debt issuance and the fair value of the liability component is recorded as the carrying amount of the equity component.

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

See Note 3, Recent Accounting Pronouncements , for the expected impact of Accounting Standards Update 2020-06 on accounting for convertible debt, which is effective January 1, 2022.

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

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

Foreign Currency Translation

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

See Note 3, Recent Accounting Pronouncements , for the expected impact of Accounting Standards Update 2020-06 on the calculation of dilutive shares for convertible debt, which is effective January 1, 2022.

Foreign Currencies

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

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

Revenues and expenses are translated using average exchange

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

rates for each calendar month during the year.

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

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

Gains or losses from foreign currency exchanges are recorded in other, net in the consolidated statements of operations.

Segment Reporting

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Recently Adopted Accounting Pronouncements

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

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

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

This update also required enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio.

This standard 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 consolidated financial statements for the year ended December 31, 2020.

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

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

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

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

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

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

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

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

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

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

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

In October 2021, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers, which amends Accounting Standards Codification, or ASC, 805 to add contract assets and contract liabilities to the list of exceptions to the recognition and measurement principles that apply to business combinations and to require that an entity (acquirer) recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with ASC Topic 606.

As a result of the amendments made by the ASU, it is expected that an acquirer will generally recognize and measure acquired contract assets and contract liabilities in a manner consistent with how the acquiree recognized and measured them in its pre-acquisition financial statements.

The ASU’s amendments are effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years.

The amendments should be applied prospectively to business combinations occurring on or after the effective date of the amendments.

Early adoption of the amendments is permitted, including adoption in an interim period.

An entity that early adopts in an interim period should apply the amendments (i) retrospectively to all business combinations for which the acquisition date occurs on or after the beginning of the fiscal year that includes the interim period of early application and (ii) prospectively to all business combinations that occur

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

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

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

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

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

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

on or after the date of initial application.

The Company has decided to early adopt this standard and will apply it to the valuation of a Flexion deferred revenue contract.

In December 2019, the FASB issued 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 standard allows for certain exceptions, including the 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 required 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 future acquisitions, the Company will 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 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 December 31, 2021

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

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

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

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

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

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

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

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

The Company has elected to adopt the new guidance using a modified retrospective method of transition, which would be applied to transactions outstanding at January 1, 2022.

As a result, after adopting the ASU’s guidance, the Company will not separately present in equity an embedded conversion feature for its convertible debt.

Instead, the Company will account for a convertible debt instrument wholly as debt.

In addition, the Company will not record interest expense on the previously recorded discount on convertible debt.

The impact on the balance sheet at January 1, 2022 increased net debt by approximately $ 64.9 million, reduced accumulated deficit by $ 47.2 million, reduced additional paid-in capital by $ 96.5 million and decreased deferred tax liabilities by $ 15.7 million.

The impact on the consolidated statement of operations will reduce interest expense by approximately $ 18.0 million in 2022, with a resultant impact on basic and diluted income (loss) per share.

NOTE 4— REVENUE

Revenue from Contracts with Customers

The Company’s 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, its bupivacaine liposome injectable suspension 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.

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

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

The Company’s net product sales consist of (i) EXPAREL in the U.S., the E.U., and the U.K.;

(ii) ZILRETTA in the U.S.;

(iii) iovera° in the U.S.

and Canada and (iv) sales of, and royalties on, its bupivacaine liposome injectable suspension for veterinary use.

Royalty revenues are from the Company’s collaborative licensing agreements.

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

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

Net Product Sales

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

The Company primarily sells ZILRETTA to specialty distributors and a specialty pharmacy, who then subsequently resell ZILRETTA to physicians, clinics and certain medical centers or hospitals.

The Company also contracts directly with healthcare providers and intermediaries such as GPOs.

Product revenue is recognized when control of the promised goods are transferred to the customers, in an amount that reflects the consideration the Company expects 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.

EXPAREL and ZILRETTA revenue is recorded at the time the product is delivered to the customer.

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

These reserves are based on 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

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

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 and other related information that may become known in the future.

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.

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

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

The following table provides a summary of activity with respect to the Company’s sales related allowances and accruals related to EXPAREL for the years ended December 31, 2021, 2020 and 2019, as well as ZILRETTA for the year ended December 31, 2021 (in thousands):

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

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

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Balance at December 31, 2021 $ 3,361 $ 1,178 $ 3,636 $ 3,494 $ 761 $ 12,430

Collaborative Licensing and Milestone Revenue

The Company’s collaboration agreements generally involve a license to the Company’s products.

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

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

Accounts Receivable

The majority of accounts receivable arise from product sales and represent amounts due from wholesalers, hospitals, ambulatory surgery centers and doctors.

The majority of accounts receivable arise from product sales and represent amounts due from wholesalers, hospitals, ambulatory surgery centers, specialty distributors, specialty pharmacy, GPOs and doctors.

Payment terms generally range from zero to 97 days from the date of the transaction, and accordingly, there is no significant financing component.

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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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PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

At contract inception, the Company assesses the goods promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a good that is distinct.

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The Company’s contracts with customers require it to transfer an individual distinct product, which represents a single performance obligation.

The Company’s performance obligation with respect to its product sales is satisfied at a point in time, which transfers control upon delivery of EXPAREL to its customers.

The Company’s performance obligation with respect to its product sales is satisfied at a point in time, which transfers control upon delivery of EXPAREL and ZILRETTA to its customers.

The Company considers control to have transferred upon delivery because the customer has legal title to the asset, physical possession of the asset has been transferred, the customer has significant risks and rewards of ownership of the asset and the Company has a present right to payment at that time.

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

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-17

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Year Ended December 31,

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Net product sales:

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

EXPAREL $ 506,515 $ 413,338 $ 407,877

ZILRETTA 12,683 — —

iovera° 16,162 8,817 7,896

Bupivacaine liposome injectable suspension 3,606 4,459 3,153

Total net product sales $ 538,966 $ 426,614 $ 418,926

NOTE 5— MYOSCIENCE ACQUISITION

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

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

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

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

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

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

The milestone is payable in the second quarter of 2021.

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

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

The Company began recognizing revenue from net product sales of ZILRETTA on November 19, 2021, the date of the Flexion Acquisition.

NOTE 5— ACQUISITIONS

Flexion Therapeutics, Inc.

On November 19, 2021, the Company acquired Flexion (the “Flexion Acquisition”), a biopharmaceutical company focused on the discovery, development, and commercialization of novel, local therapies for the treatment of patients with musculoskeletal conditions, beginning with osteoarthritis, the most common form of arthritis, pursuant to an Agreement and Plan of Merger (the “Merger Agreement”), dated as of October 11, 2021, by and among the Company, Oyster Acquisition Company Inc., a Delaware corporation and wholly owned subsidiary of the Company (“Purchaser”), and Flexion.

Following the completion of a successful tender offer for the shares of Flexion’s common stock, and pursuant to the terms of the Merger Agreement and in accordance with Section 251(h) of the General Corporation Law of the State of Delaware, Purchaser merged with and into Flexion with Flexion surviving as a wholly owned subsidiary of the Company.

The Company changed the name of Flexion to Pacira Therapeutics, Inc.

after completing the merger.

The total consideration for the Flexion Acquisition was approximately $ 578.8 million consisting of:

(i) $ 448.5 million of cash paid to former Flexion stockholders and to settle restricted stock units and in-the-money stock options;

(ii) an $ 85.1 million cash payment of Flexion debt not to be assumed by the Company and (iii) $ 45.2 million of estimated contingent consideration related to contingent value rights, or CVRs, that were issued to Flexion shareholders and certain equity award holders in conjunction with the Flexion Acquisition.

The consideration is subject to adjustments based on the achievement of certain potential milestone payments.

The Company estimates 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, as follows:

(i) $ 1.00 per CVR the first time that net sales of ZILRETTA in any calendar year equal or exceed $ 250.0 million;

(ii) $ 2.00 per CVR, the first time that net sales of ZILRETTA in any calendar year equal or exceed $ 375.0 million;

(iii) $ 3.00 per CVR, the first time that net sales of ZILRETTA in any calendar year equal or exceed $ 500.0 million;

(iv) $ 1.00 per CVR upon approval by the U.S.

Food and Drug Administration, or FDA, of a Biologics License Application (BLA) for PCRX-201 (formerly FX-201), a clinical stage gene therapy product candidate;

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-18

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(v) $ 1.00 per CVR upon approval by the FDA of a new drug application, or NDA, for PCRX-301 (formerly FX-301), an investigational product candidate.

The total consideration for the Flexion Acquisition was $ 578.8 million, which consisted of the following (in thousands, except per share amounts):

Fair Value of Purchase Price Consideration Amount

Fair value of purchase consideration paid at closing:

Cash consideration for all outstanding shares of Flexion’s common stock (50,392 shares of common stock acquired at $8.50 per share) $ 428,333

Cash consideration paid to settle RSUs and in-the-money options 20,153

Cash paid to settle Flexion debt 85,118

Fair value of contingent value rights (CVRs) 45,241

Total purchase consideration $ 578,845

The Company has accounted for the Flexion Acquisition using the acquisition method of accounting and, accordingly, has included the assets acquired, liabilities assumed and results of operations in its consolidated financial statements from the acquisition date of November 19, 2021.

The preliminary purchase price allocation is based on estimates, assumptions, valuations and other studies which have not yet been finalized.

Prior to the finalization of the purchase price allocation, if information becomes available that would indicate it is probable that unknown events had occurred and the amounts can be reasonably estimated, such items will be included in the final purchase price allocation and may change the carrying value of goodwill.

The Company is finalizing its valuation of intangible assets, tangible assets, liabilities and tax analyses, and anticipates finalizing the purchase price allocation as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-19

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following tables set forth the preliminary allocation of the Flexion Acquisition purchase price to the estimated fair value of the net assets acquired at the acquisition date (in thousands):

Amounts Recognized at the Acquisition Date

ASSETS ACQUIRED

Cash and cash equivalents $ 113,562

Short-term available-for-sale investments 11,153

Accounts receivable 32,838

Inventories 29,667

Prepaid expenses and other assets 4,852

Fixed assets 23,307

Deferred tax assets 58,015

Right-of-use assets 6,585

Identifiable intangible assets 480,000

In-process research and development (IPR&D) 61,000

Total assets $ 820,979

LIABILITIES ASSUMED

Accounts payable $ 9,794

Accrued expenses 22,746

Deferred revenue 10,000

Lease liabilities 6,585

Other liabilities 1,187

Long-term debt 201,450

Total liabilities 251,762

Total identifiable net assets acquired 569,217

Goodwill 9,628

Total consideration transferred $ 578,845

The acquired identifiable intangible assets and IPR&D assets were valued from a market participants’ perspective using a multi-period excess earnings methodology (income approach).

The identifiable finite-lived intangible asset, ZILRETTA, is a developed technology for OA knee pain with a value of $ 480.0 million and a useful life of 9.7 years.

A discount rate of 17.5 % was used in calculating the fair value of this technology.

The IPR&D asset relates to the use of ZILRETTA for the treatment of OA pain of the shoulder and was valued at $ 60.0 million.

The projected cash flows for this asset were adjusted for the probability of successful development and commercialization, and were discounted at 18.0 %.

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

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

The acquired goodwill and intangible assets are currently not deductible for tax purposes.

However, the Company is considering certain tax elections that would allow for the future deduction of acquired goodwill and intangible assets.

Flexion results from the acquisition date of November 19, 2021 through December 31, 2021, which are included in the consolidated statements of operations, are as follows (in thousands):

Classification in Consolidated Statements of Operations Acquisition Date Through

December 31, 2021

Total revenues $ 12,683

Net loss $ ( 25,010 )

Refer to Note 18, Acquisition-Related Charges Product Discontinuation and Other, for further information on costs incurred related to the Flexion Acquisition.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-20

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited Pro Forma Summary of Operations

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

This pro forma information does not purport to 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):

The following table shows the unaudited pro forma summary of operations for the years ended December 31, 2021 and 2020, as if the Flexion Acquisition had occurred on January 1, 2020.

This pro forma information does not purport to represent what the Company’s actual results would have been if the acquisition had occurred as of January 1, 2020, and is not indicative of what such results would be expected for any future period (in thousands, except per share amounts):

Year Ended December 31,

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Pro forma basic and diluted net loss per share $ ( 1.52 ) $ ( 0.46 )

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 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 Flexion.

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 on deferred tax assets and the income tax expense resulting from a 338(g) election recognized in the year ended December 31, 2019;

• Removal of MyoScience’s loss on extinguishment of debt and warrant expense in the year ended December 31, 2019;

• 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.

• Removal of the acquisition-related transaction fees and costs, including certain stock-based compensation and other compensation expenses related to the acquisition, from the years ended December 31, 2021 and 2020;

• Removal of the income tax benefit resulting from the Company decreasing its existing valuation allowance on deferred tax assets from the years ended December 31, 2021 and 2020;

• Removal of Flexion’s interest expense and associated deferred financing cost amortization;

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

• Additional cost of goods sold related to the step-up value in inventory;

• Additional amortization expense from the acquired developed technology intangible assets;

• Additional depreciation of fixed assets;

• Additional lease expense on the ROU assets.

In addition, all of the above adjustments were adjusted for the applicable tax impact.

MyoScience, Inc.

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

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

The contingent consideration consisted of contingent milestone payments up to an aggregate of $ 100.0 million upon the achievement of certain regulatory and commercial milestones, of which $ 43.0 million are available as of December 31, 2021.

The Company’s obligation to make milestone payments is limited to those milestones achieved through December 31, 2023, with any such milestones payable within 60 days of the end of the fiscal quarter of achievement.

During the years ended December 31, 2021, 2020 and 2019, the Company made $ 12.0 million, $ 15.0 million and $ 7.0 million of cash payments for the achievement of certain milestones, respectively.

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

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

Pacira BioSciences, Inc.

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Total $ 98,550 $ 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 were required related to the media fill failure, and that all inventory in question had been determined to be sellable.

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

NOTE 7— FIXED ASSETS

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Depreciation expense for the years ended December 31, 2021, 2020 and 2019 was $ 15.0 million, $ 12.0 million and $ 14.0 million, respectively.

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

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

During the years ended December 31, 2021, 2020 and 2019, the Company capitalized interest of $ 3.9 million, $ 2.4 million and less than $0.1 million, respectively.

As of December 31, 2021 and 2020, total fixed assets, net, includes leasehold improvements and manufacturing process equipment located outside of the U.S.

in the amount of $ 65.4 million and $ 67.5 million, respectively.

As of December 31, 2021 and 2020, the Company had AROs of $ 2.4 million and $ 2.0 million, respectively, included in accrued expenses and other liabilities on its consolidated balance sheet, for costs associated with returning leased space to its original condition upon the termination of certain lease agreements.

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

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

NOTE 8— LEASES

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These leases have remaining terms up to 8.7 years, some of which provide renewal options at the then-current market value.

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

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.

As a result of the Flexion Acquisition, the Company recorded new operating lease liabilities of $ 6.6 million arising from obtaining ROU lease assets for three locations.

Pacira BioSciences, Inc.

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Year Ended December 31,

2021 2020 2019

Cash paid for operating lease liabilities, net of lease incentive $ 12,709 $ 14,347 $ 7,346

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Weighted average discount rate 6.96 % 6.87 %

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

As of December 31, 2021, maturities of the Company’s operating lease liabilities are as follows (in thousands):

Year Aggregate Payments Due

2022 $ 13,171

2026 through 2030 50,801

2027 and thereafter 39,423

Total lease payments 104,165

8 unchanged sentences

from SkyePharma Holding, Inc.

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

(now a subsidiary of Vectura Group plc), or Skyepharma in 2007 (the “Skyepharma Acquisition”), the MyoScience Acquisition in 2019 and the Flexion Acquisition in 2021.

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

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Balance at December 31, 2019 $ 99,547

Goodwill arising from the MyoScience Acquisition 37,507

Balance at December 31, 2019 99,547

2020 accumulated adjustments —

Balance at December 31, 2020 99,547

Goodwill arising from milestones achieved under the Skyepharma Acquisition 36,000

Goodwill arising from the Flexion Acquisition 9,628

Balance at December 31, 2021 $ 145,175

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 date of acquisition.

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

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

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

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

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

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

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

In the fourth quarter of 2021, the Company met both of its two remaining milestones due to Skyepharma:

$ 4.0 million upon the first commercial sale in the U.K., France, Germany, Italy or Spain which was paid in the fourth quarter of 2021;

and $ 32.0 million when annual net sales collected reached $ 500.0 million, which was paid in the first quarter of 2022.

These milestone payments were treated as additions to the Skyepharma Acquisition and, therefore, recorded as goodwill.

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

In connection with the Flexion Acquisition, the Company recorded goodwill totaling $ 9.6 million.

The acquired goodwill and intangible assets are currently not deductible for tax purposes.

However, the Company is considering certain tax elections that would allow for the future deduction of acquired goodwill and intangible assets.

Intangible Assets

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

Useful Life December 31,

Intangible assets, net, consist of the IPR&D and developed technology from the Flexion Acquisition and developed technology and customer relationships from the MyoScience Acquisition and are summarized as follows (dollar amounts in thousands):

December 31, 2021 Gross Carrying Value Accumulated

Amortization Intangible

Assets, Net Weighted-Average

Developed technologies $ 590,000 $ ( 27,097 ) $ 562,903 10 years, 5 months

Customer relationships 90 ( 25 ) 65 10 years

Total finite-lived intangible assets, net 590,090 ( 27,122 ) 562,968

Acquired IPR&D 61,000 — 61,000

Total intangible assets, net $ 651,090 $ ( 27,122 ) $ 623,968

December 31, 2020 Gross Carrying Value Accumulated

Amortization Intangible

Assets, Net Weighted-Average

Developed technology $ 110,000 $ ( 13,553 ) $ 96,447 14 years

Customer relationships 90 ( 16 ) 74 10 years

Total intangible assets 110,090 110,090

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

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

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

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

Total intangible assets, net $ 110,090 $ ( 13,569 ) $ 96,521

Amortization expense on intangible assets for the years ended December 31, 2021 and 2020 was $ 13.6 million and $ 7.9 million, respectively.

Assuming no changes in the gross carrying amount of these intangible assets, the future estimated

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

amortization expense on the finite-lived intangible assets will be $ 57.4 million through 2028, $ 57.3 million in 2029 and 2030, $ 36.9 million in 2031, $ 7.9 million in 2032 and $ 2.2 million in 2033.

NOTE 10— ACCRUED EXPENSES

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Total $ 127,555 $ 70,974

(1) At December 31, 2021, accrued royalties included a $ 32.0 million milestone payment to Skyepharma that was met in the fourth quarter of 2021 for achieving annual net sales collected of $ 500.0 million on the Company’s DepoBupivacaine products, including EXPAREL.

This milestone was subsequently paid in the first quarter of 2022.

See Note 9, Goodwill and Intangible Assets , for more information.

NOTE 11— DEBT

The carrying value of the Company’s outstanding debt is summarized as follows (amounts in thousands):

Term loan B facility maturing December 2026 $ 359,497 $ —

0.750 % Convertible senior notes due August 2025

330,627 313,030

3.375 % Convertible senior notes due May 2024

2.375 % Convertible senior notes due April 2022

157,857 149,648

Total $ 1,049,230 $ 462,678

Term Loan B Facility

On December 7, 2021, the Company entered into a term loan credit agreement (the “Credit Agreement”) with JP Morgan Chase Bank, N.A., as administrative agent and the initial lender.

The term loan issued under the Credit Agreement (the “Term Loan”), which was issued at a 3 % discount and allows for a single-advance term loan B facility in the principal amount of $ 375.0 million, which is secured by substantially all of the Company’s and each subsidiary guarantor’s assets.

Subject to certain conditions, the Company may, at any time, on one or more occasions, add one or more new classes of term facilities and/or increase the principal amount of the loans of any existing class by requesting one or more incremental term facilities.

The net proceeds of the Term Loan were approximately $ 363.8 million after deducting an original issue discount of $ 11.2 million.

The total debt composition of the Term Loan is as follows (in thousands):

Term Loan maturing December 2026 $ 375,000

Deferred financing costs ( 4,443 )

Discount on debt ( 11,060 )

Total debt, net of debt discount and deferred financing costs $ 359,497

The Term Loan matures on December 7, 2026 and requires quarterly repayments of principal in the amount of $ 9.4 million.

commencing June 30, 2022, and increasing to $ 14.1 million commencing December 31, 2025, with a remaining balloon payment of approximately $ 188.0 million due at maturity.

During 2022, the Company will be required to make three

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-25

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

quarterly payments totaling $ 28.1 million.

The Company is also required to make mandatory prepayments of principal from (i) commencing with the fiscal year ending December 31, 2022, the Company’s excess cash flow (as defined in the Credit Agreement) existing in any fiscal year and if the Senior Secured Leverage Ratio (as defined in the Credit Agreement) for such fiscal year exceeds certain predetermined limits (ii) net proceeds (as defined in the Credit Agreement) of non-ordinary course assets sales and casualty events and (iii) debt issuance proceeds (other than permitted debt under the Credit Agreement).

No mandatory prepayments are due for 2021.

Prepayment penalties for the Term Loan are 3 % in loan year 1, 2 % in loan year 2, 1 % in loan year 3 and no prepayment penalties thereafter.

Prepayment penalties generally do not apply to mandatory prepayment obligations under the Credit Agreement, such as prepayments due in connection with excess cash flow.

The Term Loan requires the Company 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 Term Loan 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.

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

Term benchmark borrowings bear interest at a variable rate per annum equal to the Adjusted Term SOFR Rate (as defined in the Credit Agreement) (subject to a 75 basis points floor) plus an applicable margin of 700 basis points.

Alternate base rate borrowings bear interest at a variable rate per annum determined using a base rate (subject to a 175 basis points floor) equal to the greatest of (i) Prime Rate (as defined in the Credit Agreement) in effect on such day, (ii) NYFRB Rate (as defined in the Credit Agreement) plus 50 basis points or (iii) the Adjusted Term SOFR Rate (as defined in the Credit Agreement) plus 100 basis points, subject to certain exceptions, plus an applicable margin of 600 basis points.

As of December 31, 2021, borrowings under the Term Loan consisted entirely of term benchmark borrowings at a rate of 7.75 %.

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.

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, beginning on February 1, 2021.

1 unchanged sentence

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

0.750 % convertible senior notes due 2025

0.750 % Convertible senior notes due August 2025

$ 402,500 $ 402,500

Deferred financing costs ( 7,155 ) ( 8,940 )

5 unchanged sentences

(i) during any calendar quarter (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130 % of the conversion price on each applicable trading day;

(ii) during the five business day period immediately after any five consecutive trading day period (the ‘‘measurement period’’) in which the trading price (as defined in the 2025 Indenture) per $1,000 principal amount of notes for each trading day of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;

(iii) upon the occurrence of specified corporate events, including a merger or a sale of all or substantially all of the Company’s assets;

(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

Pacira BioSciences, Inc.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

of the measurement period was less than 98 % of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;

(iii) upon the occurrence of specified corporate events, including a merger or a sale of all or substantially all of the Company’s assets;

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

16 unchanged sentences

If the Company undergoes a fundamental change, as defined in the 2025 Indenture, subject to certain conditions, holders of the 2025 Notes may require the Company to repurchase for cash all or part of their 2025 Notes at a repurchase price equal to 100 % of the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

In addition, if a “make-whole fundamental change” (as defined in the 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.

In addition, if a make-whole fundamental change occurs prior to August 1, 2025, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its notes in connection with the make-whole fundamental change.

The 2025 Notes are the Company’s general unsecured obligations that rank senior in right of payment to all of its indebtedness that is expressly subordinated in right of payment to the 2025 Notes, and equal in right of payment to the Company’s unsecured indebtedness.

The 2025 Notes are also effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and are structurally subordinated to any debt or other liabilities (including trade payables) of the Company’s subsidiaries.

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

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

Pacira BioSciences, Inc.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

While the 2025 Notes are currently classified on the Company’s consolidated balance sheet at December 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.

Under ASC 470-20, Debt with Conversion and Other Options , an entity must separately account for the liability and equity components of convertible debt instruments (such as the 2025 Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost.

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

Convertible Senior Notes Due 2024 Assumed from the Flexion Acquisition

Prior to the Flexion Acquisition, on May 2, 2017, Flexion issued an aggregate of $ 201.3 million principal amount of 3.375 % convertible senior notes due 2024 (the “Flexion 2024 Notes”), pursuant to the indenture, dated as of May 2, 2017 (the “Original Flexion Indenture”), between Flexion and Wells Fargo Bank, National Association, as trustee (the “Flexion Trustee”), as supplemented by the First Supplemental Indenture, dated as of November 19, 2021, between Flexion and the Flexion Trustee (the “First Supplemental Flexion Indenture” and, together with the Original Flexion Indenture, the “Flexion Indenture”).

The 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.

Upon the Flexion Acquisition, the principal was assumed and recorded at fair value by the Company.

Upon conversion of the Flexion 2024 Notes, at the election of each holder thereof, each Flexion 2024 Note was convertible into cash, shares of Flexion’s common stock, or a combination thereof, at Flexion’s election, at a conversion rate of approximately 37.3413 shares of Flexion common stock per $1,000 principal amount of the Flexion 2024 Notes, which corresponded to an initial conversion price of approximately $ 26.78 per share of Flexion’s common stock.

As a result of the Flexion Acquisition, and in connection with the Notice (as defined below), holders of the Flexion 2024 Notes became entitled to certain Flexion Acquisition-related conversion and repurchase rights, as discussed below.

In addition, as a result of the Flexion Acquisition and as discussed in more detail below, any future conversion rights are subject to the occurrence of any future events giving rise to such conversion rights under the Flexion Indenture.

On December 6, 2021, as a result of the Flexion Acquisition and in accordance with the Flexion Indenture, Flexion provided a Fundamental Change Company Notice and Offer to Purchase (the “Notice”) to the holders of the Flexion 2024 Notes and offered to repurchase for cash all of the outstanding Flexion 2024 Notes, at a repurchase price in cash equal to 100 % of the principal amount of the Flexion 2024 Notes being repurchased, plus accrued and unpaid interest thereon to, but excluding, January 7, 2022, subject to the terms and conditions set forth therein.

The offer to purchase expired at 5:00 p.m., New York City time, on January 6, 2022, as scheduled.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-28

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Any holder that did not exercise its repurchase right in accordance with the terms of the Notice retained the conversion rights associated with such holder’s Flexion 2024 Notes under the Flexion Indenture.

For conversion of Flexion 2024 Notes in connection with the Fundamental Change and the Make-Whole Fundamental Change (each as defined in the Flexion Indenture) resulting from the Flexion Acquisition, each $1,000 principal amount of the Flexion 2024 Notes was convertible into (i) $317.40 in cash and (ii) 37.3413 CVRs, based on the conversion rate of 37.3413, prior to 5:00 p.m., New York City time, on January 7, 2022.

Alternatively, holders could retain their Flexion 2024 Notes and such Flexion 2024 Notes would remain outstanding subject to their existing terms, including with respect to a holder’s right to receive interest payments on the Flexion 2024 Notes and exercise any future conversion rights that may arise under the Flexion Indenture.

On January 7, 2022, following the expiration of the offer to purchase, the Company accepted the $ 192.6 million aggregate principal amount of Flexion 2024 Notes that were validly tendered (and not validly withdrawn).

No Flexion 2024 Notes were converted in connection with the Notice.

The remaining principal outstanding is $ 8.6 million as of the date of this report.

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.

1 unchanged sentence

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

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

The partial repurchase of the 2022 Notes resulted in an $ 8.1 million loss on early extinguishment of debt during the year ended December 31, 2020.

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

2.375 % convertible senior notes due 2022

2.375 % Convertible senior notes due April 2022

$ 160,000 $ 160,000

2 unchanged sentences

Total debt, net of debt discount and deferred financing costs $ 157,857 $ 149,648

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

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

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

Holders may convert their 2022 Notes at any time through the close of business on the second scheduled trading day immediately preceding April 1, 2022.

Upon conversion, holders will receive the principal amount of their 2022 Notes and any excess conversion value, calculated based on the per share volume-weighted average price for each of the 40 consecutive trading days during the observation period (as more fully described in the 2022 Indenture).

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

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-24

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

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

3 unchanged sentences

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

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

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-29

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

trading days prior to the date on which the Company provides notice of redemption.

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

3 unchanged sentences

If the Company undergoes a fundamental change, as defined in the 2022 Indenture, subject to certain conditions, holders of the 2022 Notes may require the Company to repurchase for cash all or part of their 2022 Notes at a repurchase price equal to 100 % of the principal amount of the 2022 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date.

In addition, if a “make-whole fundamental change” (as defined in the 2022 Indenture) occurs prior to April 1, 2022, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its notes in connection with the make-whole fundamental change.

In addition, if a make-whole fundamental change occurs prior to April 1, 2022, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its notes in connection with the make-whole fundamental change.

The 2022 Notes are the Company’s general unsecured obligations that rank senior in right of payment to all of its indebtedness that is expressly subordinated in right of payment to the 2022 Notes, and equal in right of payment to the Company’s unsecured indebtedness.

The 2022 Notes are also effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and are structurally subordinated to any debt or other liabilities (trade payables) of the Company’s subsidiaries.

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

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

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

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

Under ASC 470-20, Debt with Conversion and Other Options , an entity must separately account for the liability and equity components of convertible debt instruments (such as the 2022 Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost.

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The Company allocated the total transaction costs of $ 11.0 million related to the issuance of the 2022 Notes to the liability and equity components of the 2022 Notes based on their relative values.

Transaction costs attributable to the liability

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-25

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

component are amortized to interest expense over the five-year term of the 2022 Notes, and transaction costs attributable to the equity component are netted with the equity component in stockholders’ equity.

Transaction costs attributable to the liability component are amortized to interest expense over the five-year term of the 2022 Notes, and transaction costs attributable to the equity component are netted with the equity component in stockholders’ equity.

The 2022 Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by the Company.

9 unchanged sentences

Total $ 31,750 $ 25,671 $ 23,628

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

Effective interest rate on total debt 6.66 % 7.15 % 7.81 %

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-30

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 12— FINANCIAL INSTRUMENTS

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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 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 equity investment with a readily determinable fair value was calculated utilizing market quotations from a major American stock exchange (Level 1).

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

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

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

The carrying amounts of equity investments and convertible notes receivable without readily determinable fair values have not been adjusted for either impairments or upward or downward adjustments based on observable transactions.

The carrying values and fair values of the Company’s financial assets and liabilities at December 31, 2021 are as follows (in thousands):

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-26

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Value Fair Value Measurements Using

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Financial Asset:

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

Equity investments $ 14,127 $ — $ — $ 14,127

Convertible notes receivable $ 4,132 $ — $ — $ 4,132

Financial Liabilities:

1 unchanged sentence

Financial Liabilities Measured at Amortized Cost:

Term loan facility due December 2026 $ 359,497 $ — $ 371,250 $ —

2.375% convertible senior notes due 2022 (1)

2 unchanged sentences

$ 330,627 $ — $ 447,781 $ —

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

3.375% convertible senior notes due 2024 (2)

$ 201,249 $ — $ 201,552 $ —

(1) The closing price of the Company’s common stock as reported on the Nasdaq Global Select Market was $ 60.17 per share at December 31, 2021 compared to a conversion price of $ 66.89 per share for the 2022 Notes and a conversion price of $ 71.78 per share for the 2025 Notes.

Therefore, at December 31, 2021, the conversion prices were above the stock price.

1 unchanged sentence

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

(2) Relates to the Flexion 2024 Notes.

For more information, See Note 11, Debt .

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.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-31

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 $ 28.3 million and $ 38.1 million as of December 31, 2020 and 2019, respectively.

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

The Company has recognized contingent consideration related to the Flexion Acquisition and the MyoScience Acquisition in the amount of $ 57.6 million and $ 28.3 million as of December 31, 2021 and 2020, respectively.

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

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

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

The Company has measured the fair value of its contingent consideration using a probability-weighted discounted cash flow approach that is based on unobservable inputs and a Monte Carlo simulation.

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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.

On November 19, 2021, as part of the purchase price consideration related to the Flexion Acquisition, the Company recorded contingent consideration of $ 45.2 million, which represents the Company’s achievement of meeting regulatory and sales-based milestones.

For the period of acquisition through December 31, 2021, the Company recorded an additional $ 1.2 million liability due to an estimated $ 0.02 increase to contingent consideration per CVR fair value, which was included in acquisition-related charges in the consolidated statements of operations.

At December 31, 2021, the weighted average discount rate was 12.2% and the weighted average probability of success for regulatory milestones was 12.7 %.

For the year ended December 31, 2021 , the Company recognized an acquisition-related gain of $ 2.2 million and for the years ended December 31, 2020 and 2019, the Company recognized acquisition-related charges of $ 5.2 million and $ 16.7 million, respectively, related to the MyoScience Acquisition, as a result of revisions to the probabilities of regulatory milestones being met and future projections, which have been included in acquisition-related charges in the consolidated statements of operations.

At December 31, 2021, the weighted average discount rate was 11.8 % and the weighted average probability of success for regulatory milestones was 1 %.

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

Assumption Ranges Utilized as of December 31, 2020

Assumption Flexion Ranges Utilized as of

December 31, 2021 MyoScience Ranges Utilized as of

December 31, 2021

Discount rates 11.39 % to 12.92 %

Probabilities of payment for regulatory milestones 2.00 % to 100.00 %

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

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

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 the contingent consideration from the Flexion Acquisition and MyoScience Acquisition are $ 425.5 million and $ 43.0 million, respectively, as of December 31, 2021.

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

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-27

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Consideration

Balance at December 31, 2020 $ 28,346

Contingent consideration related to the Flexion Acquisition 45,241

Fair value adjustments and accretion ( 989 )

Payments made ( 15,000 )

Payments made or offset against amounts due ( 15,000 )

Balance at December 31, 2021 $ 57,598

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

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

Long-term investments consist of government bonds with maturities greater than one year but less than three years.

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

At December 31, 2020, all of the Company’s short-term and long-term investments are classified as available-for-sale investments and are determined to be Level 2 instruments, which are measured at fair value using standard industry models with observable inputs.

At December 31, 2021, all of the Company’s short-term investments are classified as

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-32

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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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Corporate bonds 9,936 102 — 10,038

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

Subtotal 421,416 320 ( 31 ) 421,705

Government bonds 95,429 30 — 95,459

Subtotal 95,429 30 — 95,459

Total $ 70,651 $ 182 $ ( 2 ) $ 70,831

4 unchanged sentences

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

1 unchanged sentence

At December 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 December 31, 2021 and December 31, 2020, the interest receivable recognized in prepaid expenses and other current assets was $ 0.1 million and $ 1.6 million, respectively.

Equity and Convertible Note Investments

At December 31, 2021 and 2020, the Company held an equity investment of $ 4.1 million and $ 1.2 million, respectively, 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.

During 2021, the Company purchased a convertible note from GeneQuine in the amount of $ 1.2 million and invested an additional $ 3.0 million in equity investments.

During the year ended December 31, 2021, the valuation of the convertible note was reduced by less than $ 0.1 million due to changes in foreign currency exchange rates.

The Company has the right to make additional investments in debt securities of $ 1.7 million predicated upon GeneQuine achieving certain prespecified near-term milestones.

In April 2021, the Company purchased preferred shares in Coda BioTherapeutics, Inc., a privately held preclinical stage biopharmaceutical company that is developing a gene-therapy platform to treat neurological disorders and diseases for a purchase price of $ 10.0 million.

There were no adjustments to this investment during the year ended December 31, 2021.

In April 2021, the Company purchased a convertible note in the amount of $ 3.0 million from Spine BioPharma, LLC, a preclinical stage biopharmaceutical company.

There were no adjustments to this investment during the year ended December 31, 2021.

Pacira BioSciences, Inc.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

Equity Investments

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

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

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

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

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

During the year ended December 31, 2021, the Company sold its investment in TELA Bio for net cash proceeds of $ 9.1 million and recognized a realized loss of $ 2.6 million, which was recorded in other, net in the consolidated statements of operations.

In 2020, the fair value of TELA Bio increased by $ 1.6 million, which was recorded in other, net in the consolidated statement of operations and in 2019, the Company also recognized an impairment loss of $ 5.7 million in other, net related to its investment in TELA Bio.

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

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

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

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

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

Subsequent to December 31, 2021, in January 2022, the Company purchased preferred shares in the privately-held Genascence Corporation, a preclinical stage biopharmaceutical company, for $ 7.5 million, recorded as an equity investment.

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.

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Such amounts may exceed federally insured limits.

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

As of December 31, 2021, four wholesalers each accounted for over 10% of the Company’s accounts receivable at 30 %, 20 %, 17 % and 11 %.

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

9 unchanged sentences

No preferred stock was issued or outstanding at either December 31, 2021 or 2020.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-29

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Accumulated Other Comprehensive Income (Loss)

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

Net Unrealized

Gains (Losses)

Net Unrealized Gains

(Losses) From Available

For Sale Investments Unrealized Foreign Currency Translation Accumulated Other Comprehensive Income (Loss)

Balance at December 31, 2018 $ ( 280 ) $ — $ ( 280 )

Net unrealized gain on investments, net of tax 602 — 602

Amounts reclassified from accumulated other comprehensive income (loss) —

Balance at December 31, 2019 322 — 322

Net unrealized gain on investments net of tax 602

Amounts reclassified from accumulated other comprehensive income (loss) —

Net unrealized loss on investments, net of tax ( 3 ) — ( 3 )

Foreign currency translation adjustments — ( 1 ) ( 1 )

Balance at December 31, 2020 319 ( 1 ) 318

1 unchanged sentence

Foreign currency translation adjustments — 29 29

Amounts reclassified from accumulated other comprehensive income (loss) —

Balance at December 31, 2021 $ 139 $ 28 $ 167

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-34

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 14— STOCK PLANS

Stock Incentive Plans

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

The June 2021 amendment and approval by the Company’s stockholders increased the number of shares of common stock authorized for issuance as equity awards under the plan by 1,500,000 shares.

1 unchanged sentence

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

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

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

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

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

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

2014 Employee Stock Purchase Plan

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The following tables contain information about the Company’s stock incentive plans at December 31, 2021:

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-30

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Stock Incentive Plan Awards Reserved For Issuance Awards

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

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-35

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company recognized stock-based compensation expense in its consolidated statements of operations for the years ended December 31, 2021, 2020 and 2019 as follows (in thousands):

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The following table summarizes the Company’s stock option activity and related information for the period from December 31, 2018 to December 31, 2021:

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-31

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Options Weighted

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Vested and expected to vest at December 31, 2021 6,050,540 $ 49.32 6.59 $ 81,407

As of December 31, 2020, $ 55.6 million of total unrecognized compensation cost related to non-vested stock options is expected to be recognized over a weighted average period of 2.7 years.

As of December 31, 2021, $ 47.3 million of total unrecognized compensation cost related to unvested stock options is expected to be recognized over a weighted average period of 2.6 years.

The Company’s stock options have a maximum expiration date of ten years from the date of grant.

1 unchanged sentence

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

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-36

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Year Ended December 31,

6 unchanged sentences

Expected term of options 5.36 years 5.36 years 5.22 years

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-32

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table summarizes the Company’s RSU activity and related information for the period from December 31, 2018 to December 31, 2021:

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Unvested and expected to vest at December 31, 2021 955,277 $ 52.85 $ 57,479

As of December 31, 2020, $ 36.2 million of total unrecognized compensation cost related to non-vested RSUs is expected to be recognized over a weighted average period of 3.1 years.

As of December 31, 2021, $ 41.0 million of total unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted average period of 2.9 years.

The Company’s RSUs have a maximum vest date of four years from the date of grant.

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

NOTE 15— NET INCOME (LOSS) PER SHARE

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

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

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

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

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

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

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

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 15— NET INCOME (LOSS) PER SHARE

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

Because the Company reported a net loss for the year ended December 31, 2019, no potentially dilutive securities were included in the computation of diluted net loss per share for that period.

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

As discussed in Note 3, Recent Accounting Pronouncements , ASU 2020-06 will require the Company to use the if-converted method upon adoption;

this new accounting pronouncement was not adopted as of December 31, 2021.

The following table sets forth the computation of basic and diluted net income (loss) per common share for the years ended December 31, 2021, 2020 and 2019 (in thousands, except per share amounts):

Year Ended December 31,

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Dilutive effect of RSUs 298 227 —

Dilutive effect of conversion premium on the 2022 Notes 38 — —

Dilutive effect of ESPP purchase options 2 1 —

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Diluted net income (loss) per common share $ 0.92 $ 3.33 $ ( 0.27 )

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

The following table summarizes the outstanding stock options, RSUs and ESPP purchase options that were excluded from the diluted net income (loss) per common share calculation because the effect of including these potential shares were antidilutive in the periods presented (in thousands):

Year Ended December 31,

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Total 2,270 4,352 7,044

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-38

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 16— INCOME TAXES

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

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

Year Ended December 31,

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State 3,533 1,185 2,096

Foreign 19 — —

Total current taxes $ 3,552 $ 1,179 $ 2,096

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Total deferred taxes $ 10,872 $ ( 126,613 ) $ ( 1,828 )

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

Total income tax expense (benefit) $ 14,424 $ ( 125,434 ) $ 268

The income tax expense of $ 14.4 million for the year ended December 31, 2021 represents the effective tax rate applied to domestic operating results adjusted for certain discrete tax items including deductible stock-based compensation, non-deductible capital losses and tax credits.

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

The income tax expense for the year ended December 31,

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

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

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

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

A reconciliation of income taxes at the U.S.

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Tax credits ( 3.00 ) % ( 7.92 ) % 19.93 %

Interest expense — % — % 218.47 %

Effect of rate changes — % — % ( 0.42 ) %

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statutory tax rate of 21.0 %.

This difference for the year ended December 31, 2020 was primarily due to the release of the domestic valuation allowance of $ 126.6 million as discussed below.

The difference for the years ended December 31, 2019 and 2018 was primarily driven by pretax losses for which the Company concluded that a majority of its tax benefits are not more-likely-than-not to be realized, resulting in the recording of a full valuation allowance.

The difference in tax rates for the year ended December 31, 2021 was primarily driven by non-deductible expenses and valuation allowances recorded against capital loss carryforwards, partially offset by stock-based compensation deductions and tax credits.

The difference in tax rates for the year ended December 31, 2020 was primarily due to the release of a domestic valuation allowance of $ 126.6 million as discussed below.

The difference for the year ended December 31, 2019 was primarily driven by pretax losses for which the Company concluded that a majority of its tax benefits are not more-likely-than-not to be realized, resulting in the recording of a full valuation allowance.

Deferred taxes reflect the tax effects of the differences between the amounts recorded as assets and liabilities for financial reporting purposes and the comparable amounts recorded for income tax purposes.

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

At each reporting date, the Company considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets.

During the year ended December 31, 2020, in part because in the current year the Company achieved three years of cumulative pretax income in the U.S.

federal and state tax jurisdictions, and based on its most recent forecasts, the Company determined that there is sufficient positive evidence to conclude that it is more likely than not that additional domestic deferred taxes of $ 126.6 million are realizable and, therefore, reduced the valuation allowance accordingly.

During the year ended December 31, 2020, the Company established a deferred tax liability of $ 20.5 million with an offset to additional paid-in capital resulting from the conversion feature of the 2025 Notes.

The initial difference between the book value of convertible debt issued with a beneficial conversion feature and its tax basis is a temporary difference.

During the year ended December 31, 2020, the Company determined there was sufficient positive evidence to conclude that it was more-likely-than-not the domestic deferred taxes of $ 126.6 million were realizable and, therefore, the domestic valuation allowance was released.

The Company maintains a full valuation allowance on its foreign net deferred tax balances as it is more-likely-than-not the tax benefits are not realizable.

Pacira BioSciences, Inc.

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Federal and state credits 35,414 17,335

Depreciation and amortization 13,473 15,778

Accruals and reserves 80,237 7,254

Stock based compensation 24,545 21,862

Deferred revenue 2,430 —

Inventory 572 1,345

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Deferred tax liabilities:

Depreciation and amortization ( 131,964 ) 13,473

Discount on convertible senior notes ( 15,521 ) ( 20,851 )

Total deferred tax liabilities ( 147,485 ) ( 7,378 )

Deferred tax assets, net of deferred tax liabilities 172,357 108,679

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The Company also had state NOLs and state tax credit carryforwards of $ 171.6 million and $ 9.5 million, respectively, which are subject to change on an annual basis due to variations in the Company’s annual state apportionment factors.

The Company’s federal and state NOLs carryforwards include $ 538.6 million and $ 28.6 million, respectively, attributed to the Flexion Acquisition.

Additionally, the Company’s federal and state tax credits include $ 11.0 million and $ 3.6 million, respectively, as a result of the Flexion Acquisition.

The federal and state NOLs will begin to expire in 2032 and 2028, respectively.

The Company had non-U.S.

tax NOLs of $ 10.3 million at December 31, 2021.

The existing federal and state NOLs will begin expiring in 2024, if the Company has not used them prior to that time.

NOLs do not expire.

Since the Company had cumulative changes in ownership of more than 50 % within a three-year period, under IRC sections 382 and 383, the Company’s ability to use certain net operating loss and credit carryforwards to offset taxable income or tax will be limited.

Since the Company had cumulative changes in ownership of more than 50 % within a three-year period, under IRC sections 382 and 383, the Company’s ability to use certain net operating losses, tax attributes and credit carryforwards to offset taxable income or tax will be limited.

Such ownership changes were triggered by the initial acquisition of the Company’s stock in 2007 as well as cumulative ownership changes arising as a result of the completion of the Company’s initial public offering and other financing transactions.

As a result of these ownership changes, the Company estimates that approximately $ 88.4 million of federal net operating losses are subject to annual limitations.

At December 31, 2020, $ 61.5 million of these federal net operating losses were available.

The Company estimates that an additional $ 10.3 million will come available in each of 2021 and 2022, $ 3.5 million in 2023 and $ 1.4 million in each of 2024 and 2025.

In addition, California and certain states have previously suspended or limited the use of NOL carryforwards for certain taxable years, and certain states are considering similar future measures.

As a result, the Company may incur higher state income tax expense in the future.

Additionally, on November 19, 2021, the Company completed the Flexion Acquisition which also triggered an ownership change.

As a result of these ownership changes, the Company estimates $ 531.7 million of federal net operating losses and $ 21.2 million of other tax attributes are subject to annual limitations.

At December 31, 2021, all of these federal net operating losses and other tax attributes were available.

The Company estimates that an additional $ 35.4 million will come available in each of 2022 to 2025, $ 30.8 million in 2026 and $ 6.9 million in 2027 and thereafter.

In accordance with ASC Topic 740, the Company establishes a valuation allowance for deferred tax assets that, in its judgment, are not more-likely-than-not realizable.

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In each reporting period, the Company assesses the likelihood that its deferred tax assets will be realized and determines if adjustments to its valuation allowance are appropriate.

The Company had a net decrease in its valuation allowance of $ 126.6 million and an increase of $ 7.0 million for the years ended December 31, 2020 and December 31, 2019, respectively.

During the year ended December 31, 2020, the Company determined that there is sufficient positive evidence to conclude that it is more likely than not that additional domestic deferred taxes of $ 126.6 million are realizable and, therefore, reduced the valuation allowance accordingly.

The net increase in the Company’s valuation allowance for the year ended December 31, 2019 included a reduction of $ 1.8 million as a result of the MyoScience Acquisition.

In 2020, the Company recorded a reserve of $ 1.5 million related to unrecognized tax benefits, or UTBs, which relate to tax positions taken during the year.

The Company’s UTB liability at December 31, 2020 was $ 6.1 million.

The change in the Company’s UTBs in 2020 is summarized as follows (in thousands):

The Company had a net increase in its valuation allowance of $ 16.5 million and a net reduction in its valuation allowance of $ 126.6 million for the years ended December 31, 2021 and December 31, 2020, respectively.

The current year net increase in The Company’s valuation allowance includes $ 12.5 million as a result of the Flexion Acquisition, $ 2.2 million against U.S.

capital loss carryforwards and $ 1.8 million against foreign net deferred tax assets.

The Company continues to maintain a full valuation allowance against foreign net deferred tax assets since it is more-likely-than-not the tax benefit related to the foreign losses are not realizable.

During the year ended December 31, 2020, the Company determined that there was sufficient positive evidence to conclude that it is more likely than not that additional domestic deferred taxes of $ 126.6 million are realizable and, therefore, reduced the valuation allowance accordingly.

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

In 2021 , the Company recorded a reserve of $ 2.9 million related to unrecognized tax benefits, or UTBs of which $ 4.3 million related to tax credit positions taken during the year, offset by a $ 1.4 million reduction for prior year tax credit positions.

The Company’s UTB liability at December 31, 2021 was $ 9.0 million.

The change in the Company’s UTBs for the year ended December 31, 2021 is summarized as follows (in thousands):

Balance at December 31, 2020 $ 6,076

Additions for current year positions 4,300

Reduction for prior year positions ( 1,355 )

Balance at December 31, 2021 $ 9,021

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In addition to elective deferrals, the DCP permits the Company to make matching and certain other discretionary contributions to the participants.

The Company recognized $ 0.2 million of related compensation expense for its DCP discretionary match for the year ended December 31, 2020.

NOTE 18— ACQUISITION–RELATED CHARGES AND PRODUCT DISCONTINUATION, NET

The Company recognized $ 0.2 million of related compensation expense for its DCP discretionary match for each of the years ended December 31, 2021 and 2020.

Cash Long-Term Incentive Plan

In December 2020, the Company’s board of directors adopted a cash long-term incentive plan, or LTIP, commencing in 2021, focused on pre-determined, objective performance goals.

The LTIP provides cash awards to participants based on the achievement of certain performance goals during each applicable performance period from January 1 through December 31 of each calendar year.

Award amounts ranging from 0 % to 225 % of the target cash award are earned based on achievement of two equally weighted financial metrics:

net revenue and adjusted earnings before interest, taxes, depreciation and amortization (EBITDA), with a relative total shareholder return modifier based on the Company’s stock price performance relative to the companies comprising the S&P Pharmaceuticals Select Industry Index.

The performance period for these metrics is one year , with an additional three years of time-vesting following the performance period.

The first performance period began on January

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-42

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

1, 2021, and for the year ended December 31, 2021, the Company recognized $ 1.1 million of related compensation expense under the LTIP, which is payable to participants in January 2025 after the three-year vesting period concludes.

NOTE 18— ACQUISITION–RELATED CHARGES, PRODUCT DISCONTINUATION AND OTHER

Acquisition-related charges, product discontinuation and other for the years ended December 31, 2021, 2020 and 2019 are summarized below (in thousands):

Year Ended December 31,

2021 2020 2019

Severance-related expenses $ 26,371 $ — $ 494

Acquisition-related fees 10,963 — 4,211

Other acquisition expenses 3,566 150 194

Total acquisition-related charges 40,900 150 4,899

Flexion contingent consideration 1,174 — —

MyoScience contingent consideration ( 2,163 ) 5,204 16,672

Termination of Nuance agreement 3,000 — —

Discontinuation of DepoCyt(e) — ( 188 ) 159

Department of Justice settlement — — 3,500

Total acquisition-related charges, product discontinuation and other $ 42,911 $ 5,166 $ 25,230

Flexion Acquisition

The Company recognized acquisition-related costs of $ 40.2 million, primarily severance, legal fees, third-party services and other one-time charges during the year ended December 31, 2021 related to the Flexion Acquisition.

See Note 5 , Acquisitions , for more information.

On November 19, 2021, as part of the purchase price consideration related to the Flexion Acquisition, the Company recorded a contingent consideration of $ 45.2 million, which represents the Company’s achievement of meeting regulatory and sales-based milestones.

From the date of the acquisition through December 31, 2021, the Company recorded an additional $ 1.2 million charge due to an estimated $ 0.02 per CVR increase to the fair value of contingent consideration, which was included in acquisition-related charges in the consolidated statements of operations.

See Note 12, Financial Instruments , for information regarding the method and key assumptions used in the fair value measurements of contingent consideration.

In conjunction with the Flexion Acquisition, the Company initiated a restructuring through a headcount reduction in the sales and administrative functions.

MyoScience Acquisition

The Company recognized acquisition-related charges of $ 5.4 million and $ 21.6 million during the years ended December 31, 2020 and 2019, respectively, related to the MyoScience Acquisition.

The acquisition-related charges reflect increases in the fair value of contingent consideration in the amount of $ 5.2 million and $ 16.7 million during the years ended December 31, 2020 and 2019, respectively.

The Company recognized acquisition-related and other charges of $ 0.7 million, $ 0.2 million and $ 4.9 million during the years ended December 31, 2021, 2020 and 2019, respectively, related to the MyoScience Acquisition.

The 2021 charges relate to one-time termination benefits in the event of a facility closure.

For more information see Note 21, Commitments and Contingencies .

The 2020 charges relate to acquisition-related accounting services.

The 2019 charges include $ 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 charges.

In addition, the Company recognized a contingent consideration credit of $ 2.2 million in 2021 and contingent consideration charges of $ 5.2 million and $ 16.7 million in 2020 and 2019, respectively.

See Note 12, Financial Instruments , for information regarding the method and key assumptions used in the fair value measurements of contingent consideration.

In addition, $ 0.2 million and $ 4.2 million of other acquisition-related charges for the years ended December 31, 2020 and 2019, which included advisory costs, including legal, financial, accounting and tax services, were incurred during the year ended December 31, 2019.

During the year ended December 31, 2019, the Company incurred $ 0.7 million of separation costs, asset write-downs and other restructuring charges.

The Company did not incur any acquisition-related charges in 2018.

See Note 5, MyoScience Acquisition , for more information.

In conjunction with the MyoScience Acquisition, the Company initiated a restructuring through a headcount reduction in the sales and administrative functions.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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, the Company 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.

Dissolution costs of $ 3.0 million were included in acquisition-related charges, product discontinuation and other in the consolidated statements of operations during the year ended December 31, 2021.

DepoCyt(e) Discontinuation

The Company recorded a gain of $ 0.2 million during the year ended December 31, 2020, and charges of $ 0.2 million and $ 1.6 million in the years ended December 31, 2019 and 2018, respectively, related to the discontinuation of its DepoCyt(e) manufacturing activities in June 2017 due to persistent technical issues specific to the DepoCyt(e) manufacturing process.

The lease of the idle DepoCyt(e) manufacturing facility expired in August 2020.

In April 2018, the Company received formal notice of the termination of a Supply Agreement and a Distribution Agreement (and all related agreements as subsequently amended) from Mundipharma International Corporation Limited and Mundipharma Medical Company, respectively (collectively, “Mundipharma”).

In November 2019, the Company reached a settlement with Mundipharma and made a $ 5.3 million payment related to the DepoCyt(e) discontinuation which had previously been accrued.

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

The Company’s acquisition-related restructuring activities and DepoCyt(e) discontinuation costs as of December 31, 2020 are summarized below (in thousands):

Severance and Related Costs Lease Costs Write-off of Property, Plant & Equipment and Inventory AROs, Other Restructuring and Discontinuation Costs Total

Balance at December 31, 2017 $ — $ 1,768 $ — $ 309 $ 2,077

Charges incurred — 1,513 — 51 1,564

Cash payments made — ( 1,311 ) — ( 91 ) ( 1,402 )

Balance sheet reclassifications — — — 13 13

Balance at December 31, 2018 — 1,970 — 282 2,252

Charges incurred 429 — 193 225 847

Cash payments made ( 348 ) — — ( 404 ) ( 752 )

Other, including non-cash activity — — ( 193 ) — ( 193 )

Balance sheet reclassifications — ( 1,970 ) — 455 ( 1,515 )

Balance at December 31, 2019 81 — — 558 639

Charges and other adjustments — — — ( 38 ) ( 38 )

Cash payments made ( 81 ) — — ( 501 ) ( 582 )

Balance at December 31, 2020 $ — $ — $ — $ 19 $ 19

The Company recorded a gain of $ 0.2 million during the year ended December 31, 2020, and a charge of $ 0.2 million in the year ended December 31, 2019, respectively, related to the discontinuation of its DepoCyt(e) manufacturing activities in June 2017 due to persistent technical issues specific to the DepoCyt(e) manufacturing process.

No costs related to the Company’s DepoCyt(e) discontinuation were recognized in the year ended December 31, 2021 as the lease of the idle DepoCyt(e) manufacturing facility expired in August 2020.

Department of Justice Inquiry Settlement

During the year ended December 31, 2019, the Company recorded a charge of $ 3.5 million for the settlement of a U.S.

Department of Justice inquiry.

Refer to Note 21, Commitments and Contingencies , for further information surrounding our legal proceedings.

NOTE 19— COMMERCIAL PARTNERS AND OTHER AGREEMENTS

Thermo Fisher Scientific Pharma Services

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

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

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

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

The Company contracted to purchase EXPAREL from Thermo Fisher, beginning with FDA approval of the first suite, which occurred in May 2018.

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

Prior to the Flexion Acquisition, in July 2015, Flexion and Thermo Fisher entered into a Manufacturing and Supply Agreement (the “ZILRETTA Manufacturing and Supply Agreement”) and a Technical Transfer and Service Agreement related to the manufacture of ZILRETTA at the same Thermo Fisher site in Swindon, England where the Company’s EXPAREL suites are located.

Thermo Fisher agreed to undertake certain transfer activities and construction services needed to prepare its facility for the commercial manufacture of ZILRETTA in dedicated manufacturing suites.

Flexion provided Thermo Fisher with certain equipment and materials necessary to manufacture ZILRETTA.

The Company makes monthly payments to Thermo Fisher for such activities and reimburses Thermo Fisher for certain material, equipment and miscellaneous expenses and additional services.

The initial term of the ZILRETTA Manufacturing and Supply Agreement that the Company assumed as part of the Flexion Acquisition expires in October 2027.

The Company pays a monthly base fee to Thermo Fisher for the operation of the manufacturing suites and a per product fee for each vial of ZILRETTA based upon a forecast of commercial demand.

The Company also reimburses Thermo Fisher for purchases of materials and equipment made on its behalf, certain nominal expenses and additional services.

The ZILRETTA Manufacturing and Supply Agreement will remain in full effect unless and

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

until it expires or is terminated.

Upon termination of the ZILRETTA Manufacturing and Supply Agreement (other than termination by the Company in the event that Thermo Fisher does not meet the construction and manufacturing milestones or for a breach by Thermo Fisher), the Company will be obligated to pay for the costs incurred by Thermo Fisher associated with the removal of its manufacturing equipment and for Thermo Fisher’s termination costs up to a specified capped amount.

Eurofarma Laboratories S.A.

In June 2021, the Company entered into a distribution agreement with Eurofarma Laboratories S.A., or Eurofarma, for the development and commercialization of EXPAREL in Latin America.

Under the terms of the agreement, Eurofarma obtained the exclusive right to market and distribute EXPAREL in 19 countries in Latin America, including Argentina, Brazil, Colombia and Mexico.

In addition, Eurofarma is responsible for regulatory filings for EXPAREL in these countries.

The Company received a $ 0.3 million upfront payment that is partially refundable upon certain circumstances and will receive royalties based on Eurofarma’s future commercialization of the product and is also eligible to receive milestone payments that are triggered by the achievement of certain regulatory and commercial events.

The Company recognized $ 0.1 million of collaborative licensing and milestone revenue in its consolidated statements of operations during the year ended December 31, 2021.

Verve Medical Products, Inc.

In July 2021, the Company entered into a licensing agreement with Verve Medical Products, Inc.

for the distribution of iovera° in Canada.

The Company began selling iovera° in Canada in the fourth quarter of 2021.

DePuy Synthes Sales, Inc.

In January 2017, the Company announced a Co-Promotion Agreement with DePuy Synthes Sales, Inc., or DePuy Synthes, part of the Johnson & Johnson family of companies, to market and promote the use of EXPAREL for orthopedic procedures in the U.S.

DePuy Synthes field representatives, specializing in joint reconstruction, spine, sports medicine, trauma and cranio-maxillofacial (CMF) procedures, collaborate with and supplement the Company’s field teams by expanding the reach and frequency of EXPAREL education in the hospital surgical suite and ambulatory surgery center settings.

DePuy Synthes field representatives, specializing in joint reconstruction, spine, sports medicine, trauma and cranio-maxillofacial (CMF) procedures, collaborated with and supplemented the Company’s field teams by expanding the reach and frequency of EXPAREL education in the hospital surgical suite and ambulatory surgery center settings.

In July 2020, the Company notified DePuy Synthes that the Co-Promotion Agreement would terminate on January 2, 2021.

The Company has estimated termination-related costs of up to $ 9.0 million which have been recorded in selling, general and administrative expense during the year ended December 31, 2020.

The Company recorded termination-related costs of $ 8.8 million which were recorded in selling, general and administrative expense during the year ended December 31, 2020.

Aratana Therapeutics, Inc.

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Aratana began purchasing bupivacaine liposome injectable suspension product in 2016, which they market under the trade name NOCITA ® (a registered trademark of Aratana) for veterinary use.

Nuance Biotech Co.

In June 2018, the Company entered into 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 agreed to be the sole supplier of EXPAREL to Nuance and has granted Nuance the exclusive rights to develop and commercialize EXPAREL in China.

In June 2018, the Company recognized an upfront payment of $ 3.0 million since collaborative licensing revenue is recognized at the point in time when the license is provided and is not expected to substantively change.

This payment was received in July 2018 and the Company is eligible to receive future milestone payments of up to $ 60.0 million that are triggered by filing for and securing regulatory approval(s) and annual sales in China exceeding certain thresholds.

The Company is also entitled to tiered royalties as a percentage of net sales.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-45

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Hong Kong Pharma Tainuo Ltd.

Prior to the Flexion Acquisition, in March 2020, Flexion entered into an exclusive license agreement with Hong Kong Tainuo Pharma Ltd., or HK Tainuo, and Jiangsu Tainuo Pharmaceutical Co.

Ltd., or Jiangsu Tainuo, a subsidiary of China Shijiazhuang Pharmaceutical Co, Ltd., for the development and commercialization of ZILRETTA in Greater China (consisting of mainland China, Hong Kong, Macau and Taiwan).

Under the terms of the agreement, HK Tainuo paid Flexion an upfront payment of $ 10.0 million during the year ended December 31, 2020 which was recorded as deferred revenue as of December 31, 2021.

The Company is also eligible to receive up to $ 32.5 million in aggregate development, regulatory and commercial sales milestone payments.

HK Tainuo is responsible for the clinical development, product registration and commercialization of ZILRETTA in Greater China.

The Company is solely responsible for the manufacture and supply of ZILRETTA to HK Tainuo for all clinical and commercial activities.

The terms related to product manufacturing and supply, including pricing and minimum purchase requirements agreed to in the license agreement, will be covered by a separate supply agreement, which has not yet been finalized.

Unless terminated earlier in accordance with its terms, the license agreement continues in effect in perpetuity or as long as HK Tainuo or Jiangsu Tainuo continue to sell ZILRETTA in Greater China.

The proceeds associated with the upfront payment have been recorded in long-term deferred revenue on the consolidated balance sheet, as there is uncertainty around the timing of when the revenue will be recognized.

NOTE 20— RELATED PARTY TRANSACTIONS

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In connection with the consulting agreement, Dr.

Pace received an option to purchase 20,000 shares of common stock at an exercise price of $ 11.02 per share and an option to purchase 70,000 shares of common stock at an exercise price of $ 16.67 per share.

No services were provided under the consulting agreement in the years ended December 31, 2021, 2020, or 2019, and as of December 31, 2021 and 2020, there was nothing payable to Dr.

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Except as described below, the Company is not presently a party to any legal proceedings that it believes to be material, and is not aware of any pending or threatened litigation against the Company which it believes could have a material adverse effect on its business, operating results, financial condition or cash flows.

Pacira BioSciences, Inc.

| 2020 Form 10-K | Page F-39

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MyoScience Milestone Litigation

In August 2020, the Company and its subsidiary, Pacira CryoTech, Inc.

(“Pacira CryoTech”), filed a lawsuit in the Court of Chancery of the State of Delaware (the “Delaware Court”) against Fortis Advisors LLC (“Fortis”), solely in its capacity as representative for the former securityholders of MyoScience, and certain other defendants, seeking declaratory judgment with respect to certain terms of the merger agreement for the MyoScience Acquisition (the “Merger Agreement”), specifically related to the achievement of certain milestone payments under the Merger Agreement.

(“Pacira CryoTech”), filed a lawsuit in the Court of Chancery of the State of Delaware against Fortis Advisors LLC (“Fortis”), solely in its capacity as representative for the former securityholders of MyoScience, and certain other defendants, seeking declaratory judgment with respect to certain terms of the merger agreement for the MyoScience Acquisition (the “Merger Agreement”), specifically related to the achievement of certain milestone payments under the Merger Agreement.

In addition, the Company and Pacira CryoTech sought general, special and compensatory damages against the other defendants related to breach of fiduciary duties in connection with the purported achievement of milestone payments under the Merger Agreement, and breach of the Merger Agreement and certain other agreements with the defendants.

In October 2020, Fortis filed an answer and counterclaim against the Company and Pacira CryoTech seeking to recover certain milestone payments under the Merger Agreement totaling $ 40.0 million, and attorneys’ fees.

In October 2020, Fortis filed an answer and counterclaim against the Company and Pacira CryoTech seeking to recover certain milestone payments under the Merger Agreement.

The total remaining value of these milestones is $ 30.0 million, plus attorneys’ fees.

The Company believes that the counterclaim from Fortis is without merit and intends to vigorously defend against all claims.

The Company is unable to predict the outcome of this action at this time.

eVenus Pharmaceutical Laboratories Litigations

In October 2021, the Company received a Notice Letter advising that eVenus Pharmaceutical Laboratories, Inc., or eVenus, of Princeton, New Jersey, submitted to the FDA an Abbreviated New Drug Application (ANDA) with a Paragraph IV certification seeking authorization for the manufacturing and marketing of a generic version of EXPAREL (266 mg/20 mL) in the U.S.

prior to the expiration of U.S.

11,033,495 (the ’495 patent).

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-46

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

In November 2021, the Company filed a patent infringement suit against eVenus and its parent company in the U.S.

District Court for the District of New Jersey (21-cv-19829) asserting infringement of the ’495 patent.

This triggered an automatic 30-month stay of final approval of the eVenus ANDA.

On January 6, 2022, eVenus filed an Answer with counterclaims to the Complaint, alleging the ’495 patent is invalid and/or not infringed through the manufacture, sale, or offer for sale of the product described in product described in eVenus’s ANDA submission.

In December 2021, the Company received a second Notice Letter advising that eVenus submitted to the FDA an amendment to its ANDA with a Paragraph IV Certification seeking authorization for the manufacturing and marketing of a generic version of EXPAREL (133 mg/10 mL) in the U.S.

prior to the expiration of the ’495 patent.

In the Notice Letter, eVenus also advised that it submitted a Paragraph IV Certification to the FDA seeking authorization for the manufacturing and marketing of a generic version of EXPAREL (266 mg/20 mL and 133 mg/10 mL) in the U.S.

prior to the expiration of U.S.

11,179,336 (the ’336 patent).

eVenus further alleges in the Notice Letter that both the ’495 patent and the ’366 patent are invalid and/or not infringed.

In February 2022, the Company filed a second patent infringement suit against eVenus and its parent company in the U.S.

District Court for the District of New Jersey (22-cv-00718) asserting that the 133 mg/10 mL ANDA product will infringe the ’495 and ’336 patents and that the 266 mg/20 mL ANDA product will infringe the ’336 patent.

This filing triggered a second automatic 30-month stay of final approval for the 133 mg/10 mL ANDA product.

These litigations are in their infancy, and the Company is unable to predict the outcome of this action at this time.

Research Development Foundation

Pursuant to an agreement with the Research Development Foundation, or RDF, the Company was required to pay RDF a low single-digit royalty on the collection of revenues from certain products, for as long as certain patents assigned to the Company under the agreement remain valid.

RDF has the right to terminate the agreement for an uncured material breach by the Company, in connection with its bankruptcy or insolvency or if it directly or indirectly opposes or disputes the validity of the assigned patent rights.

The Company’s U.S.

11,033,495 issued on June 15, 2021.

Thereafter, RDF asserted that the issuance of that patent extends the Company’s royalty obligations under the agreement until 2041.

The Company believes that the royalty period under the agreement was set to end on December 24, 2021 with the expiration of its U.S.

Because of the disagreement over the interpretation of the agreement, in December 2021, the Company filed a declaratory judgment lawsuit in the U.S.

District Court for the District of Nevada (21-cv-02241).

The lawsuit seeks a declaration from the court that the Company owes no royalties to RDF with respect to its EXPAREL product after December 24, 2021.

During the pendency of the lawsuit, the Company will continue to pay royalties to RDF under protest, however, the Company is unable to predict the outcome of this action at this time.

Department of Justice Inquiry Settlement

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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.

The Company has been given assurances that this concluded the investigation that originated from the U.S.

Department of Justice subpoena in April 2015.

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The Company has approximately $ 50.3 million of minimum, non-cancelable contractual commitments for contract manufacturing services and $ 9.2 million of minimum, non-cancelable contractual commitments for the purchase of certain raw materials as of December 31, 2021.

Other Commitments and Contingencies

The 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.

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.

The sNDA was accepted by the FDA in August 2020 with a Prescription Drug User Fee Act (PDUFA) action date of March 22, 2021.

Additionally, the Company is in negotiations with the FDA and the European Medicines Agency (EMA) for clarity on other pediatric study obligations.

In addition to the initial $ 19.6 million purchase price for the Skyepharma Acquisition, the Company entered into an earn-out agreement with Skyepharma based on the Company reaching certain revenue milestones following the Skyepharma Acquisition.

Pursuant to this agreement, the Company is required to pay Skyepharma milestone payments up to an aggregate of $ 62.0 million, of which $ 36.0 million are for potential milestones not yet met.

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

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

Refer to Note 9, Goodwill and Intangible Assets , for further discussion.

Pursuant to an agreement with the Research Development Foundation, or RDF, the Company is required to pay RDF a low single-digit royalty on the collection of revenues from its DepoFoam-based products, for as long as certain patents assigned to the Company under the agreement remain valid.

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Refer to Note 5, MyoScience Acquisition , for information on potential contingent milestone payments related to the MyoScience Acquisition.

NOTE 22— SELECTED QUARTERLY FINANCIAL DATA (UNAUDITED)

The following tables present selected quarterly financial data for the years ended December 31, 2020 and 2019.

For periods where the Company reported a net loss, no potentially dilutive securities were included in the computation of diluted net loss per share (in thousands, except per share amounts):

Three Months Ended

2020 June 30,

2020 September 30,

2020 December 31,

Total revenues $ 105,684 $ 75,505 $ 117,484 $ 130,974

Cost of goods sold 29,732 22,305 29,993 35,298

Total operating expenses 88,590 82,652 99,864 112,191

Net income (loss) 8,159 ( 7,269 ) 130,119 14,514

Basic net income (loss) per common share (1)

$ 0.19 $ ( 0.17 ) $ 3.03 $ 0.33

Diluted net income (loss) per common share (1)

$ 0.19 $ ( 0.17 ) $ 2.94 $ 0.32

Three Months Ended

2019 June 30,

2019 September 30,

2019 December 31,

Total revenues $ 91,313 $ 102,604 $ 104,685 $ 122,424

Cost of goods sold 27,303 25,201 22,304 31,904

Total operating expenses 90,234 97,329 102,272 120,711

Net income (loss) ( 2,771 ) 2,730 ( 6,087 ) ( 4,888 )

Basic net income (loss) per common share (1)

$ ( 0.07 ) $ 0.07 $ ( 0.15 ) $ ( 0.12 )

Diluted net income (loss) per common share (1)

$ ( 0.07 ) $ 0.06 $ ( 0.15 ) $ ( 0.12 )

(1) Basic and diluted earnings per share are computed independently for each of the quarters presented.

Therefore, the sum of the quarterly basic and diluted earnings per share amounts may not equal the full-year basic and diluted earnings per share computation.

Other Commitments and Contingencies

Pediatric Trial Commitments

The FDA, as a condition of EXPAREL approval, has required the Company to study EXPAREL in pediatric patients, as well as the administration of EXPAREL as a nerve block in the pediatric setting.

The Company was granted a deferral for the required pediatric trials until after the indications were approved in adults.

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

Despite the U.K.’s withdrawal from the E.U., the agreed pediatric plan is applicable in the U.K.

In December 2019, the Company announced positive results for its extended pharmacokinetic and safety study (“PLAY”) for local analgesia in children aged six to 17 undergoing cardiovascular or spine surgeries.

Those positive results were the basis for the submission of a supplemental New Drug Application, or sNDA, in the U.S.

and Type II variations in the E.U.

to expand the EXPAREL label to include use in patients six years of age and older for single-dose infiltration to produce postsurgical local analgesia.

In March 2021, the Company announced that the FDA approved the submission of the sNDA in the U.S.

The EMA and the Medicines and Healthcare Products Regulatory Agency, or MHRA, are still reviewing the Type II variations.

The Company is working with the FDA, MAA and MHRA to finalize the regulatory pathway for its remaining pediatric commitments.

Contingent Milestone Payments

Refer to Note 5, Acquisitions , for information on potential contingent milestone payments related to the MyoScience and Flexion acquisitions.

PCRX-201 and PCRX-301

PCRX-201 (formerly FX-201) and PCRX-301 (formerly FX-301) were added to the Company’s portfolio as part of the Flexion Acquisition.

Prior to the Flexion Acquisition, in February 2017, Flexion entered into an agreement with GeneQuine to acquire the global rights to PCRX-201, a gene therapy product candidate.

As part of the agreement, up to an aggregate of $ 56.0 million of payments could become due upon the achievement of certain development and regulatory milestones.

Prior to the Flexion Acquisition, in September 2019, Flexion entered into a definitive agreement with Xenon Pharmaceuticals, Inc.

to acquire the global rights to PCRX-301, a locally administered Na V 1.7 inhibitor.

As part of the agreement, up to an aggregate of $ 45.8 million of payments could become due upon the achievement of certain development and regulatory milestones and up to $ 75.0 million of payments could become due for sales-related milestones.

One-Time Termination Benefits

The Company has communicated to a select number of employees a commitment to provide one-time termination benefits in the event that a facility closure occurs.

The Company is recognizing these expenses ratably over the remaining service period required.

The Company currently estimates the total cost of these one-time benefits to be approximately $ 1.1 million.

During the year ended December 31, 2021, the Company recognized $ 0.7 million in one-time termination charges, which are included in acquisition-related (gains) charges, product discontinuation and other in the consolidated statements of operations.

Pacira BioSciences, Inc.

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

What changed 10-K

Item 9A. Controls and Procedures