What changed in this filing

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Item 1. Financial Statements

2022-11-03 compared with 2022-08-03 · 384 added, 321 removed, 1162 unchanged (38% of the section changed)

3 unchanged sentences

(In thousands, except share and per share amounts)

September 30,

2022 December 31,

6 unchanged sentences

Total current assets 533,411 866,048

Noncurrent available-for-sale investments 17,394 —

Fixed assets, net 193,646 188,401

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5,000,000 shares authorized;

none issued and outstanding at June 30, 2022 and December 31, 2021

none issued and outstanding at September 30, 2022 and December 31, 2021

Common stock, par value $ 0.001 ;

250,000,000 shares authorized;

45,801,578 and 44,734,308 shares issued and outstanding at June 30, 2022 and December 31, 2021, respectively

45,864,319 and 44,734,308 shares issued and outstanding at September 30, 2022 and December 31, 2021, respectively

Additional paid-in capital 909,396 942,091

10 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

8 unchanged sentences

Amortization of acquired intangible assets 14,322 1,967 42,966 5,900

Acquisition-related (gains) charges, product discontinuation and other ( 18,058 ) 146 ( 13,721 ) 2,019

Acquisition-related charges (gains) and other 489 237 ( 13,232 ) 2,256

Total operating expenses 146,177 96,289 424,951 296,626

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Income tax expense ( 2,762 ) ( 6,571 ) ( 5,359 ) ( 15,492 )

Net income $ 19,876 $ 19,081 $ 26,704 $ 29,450

Net income per share:

Basic net income per common share $ 0.44 $ 0.43 $ 0.59 $ 0.67

Diluted net income per common share $ 0.40 $ 0.42 $ 0.55 $ 0.64

Net (loss) income $ ( 693 ) $ 17,660 $ 26,011 $ 47,110

Net (loss) income per share:

Basic net (loss) income per common share $ ( 0.02 ) $ 0.40 $ 0.57 $ 1.07

Diluted net (loss) income per common share $ ( 0.02 ) $ 0.39 $ 0.56 $ 1.03

Weighted average common shares outstanding:

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PACIRA BIOSCIENCES, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME

(In thousands)

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net income $ 19,876 $ 19,081 $ 26,704 $ 29,450

Net (loss) income $ ( 693 ) $ 17,660 $ 26,011 $ 47,110

Other comprehensive (loss) income:

Net unrealized (loss) gain on investments, net of tax ( 160 ) 12 ( 893 ) ( 138 )

Net unrealized loss on investments, net of tax ( 163 ) ( 30 ) ( 1,056 ) ( 168 )

Foreign currency translation adjustments 98 2 219 3

Total other comprehensive (loss) income ( 78 ) 9 ( 772 ) ( 137 )

Comprehensive income $ 19,798 $ 19,090 $ 25,932 $ 29,313

Total other comprehensive loss ( 65 ) ( 28 ) ( 837 ) ( 165 )

Comprehensive (loss) income $ ( 758 ) $ 17,632 $ 25,174 $ 46,945

See accompanying notes to condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(In thousands)

3 unchanged sentences

Shares Amount Total

Balance at March 31, 2022 45,064 $ 45 $ 867,890 $ ( 157,832 ) $ ( 527 ) $ 709,576

Balance at June 30, 2022 45,802 $ 46 $ 895,151 $ ( 137,956 ) $ ( 605 ) $ 756,636

Exercise of stock options 37 — 1,563 — — 1,563

Vested restricted stock units 25 — — — — —

Common stock issued under employee stock

purchase plan 37 — 1,821 — — 1,821

Stock-based compensation — — 12,682 — — 12,682

Issuance of common stock upon conversion of 2022 convertible senior notes (Note 9) 102 — 3,040 — — 3,040

Other comprehensive loss (Note 11) — — — — ( 65 ) ( 65 )

Net income — — — 19,876 — 19,876

Balance at June 30, 2022 45,802 $ 46 $ 895,151 $ ( 137,956 ) $ ( 605 ) $ 756,636

Net loss — — — ( 693 ) — ( 693 )

Balance at September 30, 2022 45,864 $ 46 $ 909,396 $ ( 138,649 ) $ ( 670 ) $ 770,123

Common Stock Additional

2 unchanged sentences

Shares Amount Total

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

Balance at June 30, 2021 44,437 $ 44 $ 911,368 $ ( 224,425 ) $ 181 $ 687,168

Exercise of stock options 74 1 3,017 — — 3,018

Vested restricted stock units 12 — — — — —

Common stock issued under employee stock

purchase plan 31 — 1,574 — — 1,574

Stock-based compensation — — 10,784 — — 10,784

Other comprehensive income (Note 11) — — — — 9 9

Other comprehensive loss (Note 11) — — — — ( 28 ) ( 28 )

Net income — — — 17,660 — 17,660

Balance at June 30, 2021 44,437 $ 44 $ 911,368 $ ( 224,425 ) $ 181 $ 687,168

Balance at September 30, 2021 44,523 $ 45 $ 925,169 $ ( 206,765 ) $ 153 $ 718,602

See accompanying notes to condensed consolidated financial statements.

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2022 AND 2021

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021

(In thousands)

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Net income — — — 26,011 — 26,011

Balance at June 30, 2022 45,802 $ 46 $ 895,151 $ ( 137,956 ) $ ( 605 ) $ 756,636

Balance at September 30, 2022 45,864 $ 46 $ 909,396 $ ( 138,649 ) $ ( 670 ) $ 770,123

Common Stock Additional

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Net income — — — 47,110 — 47,110

Balance at June 30, 2021 44,437 $ 44 $ 911,368 $ ( 224,425 ) $ 181 $ 687,168

Balance at September 30, 2021 44,523 $ 45 $ 925,169 $ ( 206,765 ) $ 153 $ 718,602

See accompanying notes to condensed consolidated financial statements.

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(In thousands)

Six Months Ended

Nine Months Ended

September 30,

Operating activities:

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Changes in contingent consideration ( 23,394 ) ( 2,147 )

Impairment of investment 10,000 —

Loss on investment 184 2,641

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

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

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

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Therefore, these interim condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021 .

The condensed consolidated financial statements at June 30, 2022, and for the three and six-month periods ended June 30, 2022 and 2021, are unaudited, but include all adjustments (consisting of only normal recurring adjustments) which, in the

The condensed consolidated financial statements at September 30, 2022, and for the three and nine-month periods ended September 30, 2022 and 2021, are unaudited, but include all adjustments (consisting of only normal recurring adjustments)

Pacira BioSciences, Inc.

| Q3 2022 Form 10-Q | Page 10

opinion of management, are necessary to present fairly the financial information set forth herein in accordance with GAAP.

which, in the opinion of management, are necessary to present fairly the financial information set forth herein in accordance with GAAP.

The condensed consolidated balance sheet at December 31, 2021 is derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

3 unchanged sentences

Total 75 % 85 % 76 % 85 %

The percentage of revenues from the Company’s three largest wholesalers have shifted in the current year with the addition of ZILRETTA sales.

The percentage of revenues from the Company’s three largest wholesalers have shifted in the current year with the addition of ZILRETTA sales, which began in November 2021 following the completion of the Flexion Acquisition (as defined below).

Recently Adopted Accounting Pronouncements

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

EXPAREL and ZILRETTA revenues are recorded at the time the products are transferred 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.

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Accounts Receivable

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.

The majority of accounts receivable arise from product sales and represent amounts due from wholesalers, hospitals, ambulatory surgery centers, specialty distributors, specialty pharmacy 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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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

13 unchanged sentences

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.

No contingent consideration milestones were achieved in the six months ended June 30, 2022.

No contingent consideration milestones were achieved in the nine months ended September 30, 2022.

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

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| Q3 2022 Form 10-Q | Page 13

The Company is finalizing its valuation of 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.

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

The following table sets 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):

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(a) As previously reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021.

(b) Represents pre-acquisition expenses that were paid by the Company in 2022, partially offset by the release of estimated reserves.

(b) Represents the finalization of a tax study and pre-acquisition expenses that were paid by the Company in 2022, partially offset by the release of estimated reserves.

Unaudited Pro Forma Summary of Operations

The following table shows the unaudited pro forma summary of operations for the three and six-month periods ended June 30, 2021, as if the Flexion Acquisition had occurred on January 1, 2020.

The following table shows the unaudited pro forma summary of operations for the three and nine-month periods ended September 30, 2021, 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 Flexion 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):

Three Months Ended

June 30, 2021 Six Months Ended

June 30, 2021

September 30, 2021 Nine Months Ended

September 30, 2021

Total revenues $ 149,048 $ 456,429

1 unchanged sentence

Pro forma basic and diluted net loss per share $ ( 0.24 ) $ ( 0.71 )

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:

• Recognition of the income tax benefit resulting from decreasing Flexion’s existing valuation allowance on deferred tax assets for the three and six months ended June 30, 2021;

Pacira BioSciences, Inc.

| Q3 2022 Form 10-Q | Page 14

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:

• Recognition of the income tax benefit resulting from decreasing Flexion’s existing valuation allowance on deferred tax assets for the three and nine months ended September 30, 2021;

• Removal of Flexion’s interest expense and associated deferred financing cost amortization related to the $ 85.1 million of debt not assumed;

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

June 30, December 31,

September 30, December 31,

Raw materials $ 35,602 $ 36,337

4 unchanged sentences

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

June 30, December 31,

September 30, December 31,

Machinery and equipment $ 118,233 $ 117,264

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Fixed assets, net $ 193,646 $ 188,401

For the three months ended June 30, 2022 and 2021, depreciation expense was $ 6.5 million and $ 2.9 million, respectively.

For the three months ended June 30, 2022 and 2021, there was $ 1.0 million and $ 1.1 million of capitalized interest on the construction of manufacturing sites, respectively.

For the six months ended June 30, 2022 and 2021, depreciation expense was $ 12.2 million and $ 5.8 million, respectively.

For the six months ended June 30, 2022 and 2021, there was $ 1.8 million and $ 2.1 million of capitalized interest on the construction of manufacturing sites, respectively.

At June 30, 2022 and December 31, 2021, total fixed assets, net includes leasehold improvements and manufacturing process equipment located in Europe in the amount of $ 60.0 million and $ 65.4 million, respectively.

As of June 30, 2022 and December 31, 2021, the Company had asset retirement obligations of $ 3.1 million and $ 2.4 million, respectively, included in accrued expenses and other liabilities on its condensed consolidated balance sheet, for costs associated with returning leased spaces to their original condition upon the termination of certain lease agreements.

For the three months ended September 30, 2022 and 2021, depreciation expense was $ 5.8 million and $ 3.8 million, respectively.

For the three months ended September 30, 2022 and 2021, there was $ 1.1 million and $ 0.9 million of capitalized interest on the construction of manufacturing sites, respectively.

For the nine months ended September 30, 2022 and 2021, depreciation expense was $ 18.0 million and $ 9.6 million, respectively.

For the nine months ended September 30, 2022 and 2021, there was $ 2.9 million and $ 3.0 million of capitalized interest on the construction of manufacturing sites, respectively.

At September 30, 2022 and December 31, 2021, total fixed assets, net includes leasehold improvements and manufacturing process equipment located in Europe in the amount of $ 57.4 million and $ 65.4 million, respectively.

As of September 30, 2022 and December 31, 2021, the Company had asset retirement obligations of $ 3.1 million and $ 2.4 million, respectively, included in accrued expenses and other liabilities on its condensed consolidated balance sheet, for costs associated with returning leased spaces to their original condition upon the termination of certain lease agreements.

Pacira BioSciences, Inc.

5 unchanged sentences

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

During the three months ended September 30, 2022, the Company entered into a partial sublease for the former Flexion research and development laboratory in Woburn, Massachusetts which resulted in a $ 0.4 million ROU asset reclassified to a fixed asset.

The operating lease costs for the facilities include lease and non-lease components, such as common area maintenance and other common operating expenses, along with executory costs such as insurance and real estate taxes.

Total operating lease costs are as follows (in thousands):

Three Months Ended Six Months Ended

June 30, June 30,

Total operating lease expense, net is as follows (in thousands):

Three Months Ended Nine Months Ended

September 30, September 30,

2022 2021 2022 2021

1 unchanged sentence

Variable lease costs 540 416 1,520 1,318

Total $ 4,050 $ 3,346 $ 8,049 $ 6,745

Sublease income ( 169 ) — ( 169 ) —

Lease expense, net of sublease income $ 3,811 $ 3,335 $ 11,860 $ 10,080

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

Six Months Ended

Nine Months Ended

September 30,

Cash paid for operating lease liabilities, net of lease incentive $ 9,922 $ 9,868

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The weighted average remaining lease term and the weighted average discount rate are summarized as follows:

September 30,

Weighted average remaining lease term 7.11 years 8.46 years

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Year Aggregate Minimum Payments Due

2022 (remaining six months) $ 6,509

2022 (remaining three months) $ 3,261

Thereafter 39,423

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| Q3 2022 Form 10-Q | Page 16

As of June 30, 2022, the Company has entered into one lease agreement not included above as the Company has not yet taken possession of the property.

As of September 30, 2022, the Company has entered into one lease agreement not included above as the Company has not yet taken possession of the property.

When the lease commences, the future lease obligations will be as follows (in thousands):

Year Aggregate Minimum Payments Due

2022 (remaining six months) $ 81

2022 (remaining three months) $ 81

Thereafter 443

Total future lease payments $ 2,517

Subsequent to June 30, 2022, the Company entered into a sublease for the former Flexion research and development laboratory in Woburn, Massachusetts in July 2022 which resulted in a $ 0.4 million ROU asset to be reclassified to a fixed asset.

NOTE 8— GOODWILL AND INTANGIBLE ASSETS

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(the Company’s California operating subsidiary) from SkyePharma Holding, Inc., or Skyepharma, (now a subsidiary of Vectura Group plc) in March 2007 (the “Skyepharma Acquisition”), MyoScience, Inc., or MyoScience, (the “MyoScience Acquisition”) in April 2019 and the Flexion Acquisition in November 2021.

The balances at June 30, 2022 and December 31, 2021 were $ 146.1 million and $ 145.2 million, respectively.

The balances at September 30, 2022 and December 31, 2021 were $ 157.4 million and $ 145.2 million, respectively.

The increase was due to measurement period adjustments associated with the Flexion Acquisition.

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Intangible assets, net, consist of the in-process research and development, or 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):

June 30, 2022 Gross Carrying Value Accumulated

September 30, 2022 Gross Carrying Value Accumulated

Amortization Intangible

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

Amortization expense on intangible assets for the three and six months ended June 30, 2022 was $ 14.3 million and $ 28.6 million, respectively.

Amortization expense on intangible assets for the three and six months ended June 30, 2021 was

Amortization expense on intangible assets for the three and nine months ended September 30, 2022 was $ 14.3 million and $ 43.0 million, respectively.

Amortization expense on intangible assets for the three and nine months ended September 30, 2021 was $ 2.0 million and $ 5.9 million, respectively.

The increase in amortization expense in the current year is a result of the amortization of ZILRETTA for osteoarthritis knee pain acquired as part of the Flexion Acquisition in November 2021.

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| Q3 2022 Form 10-Q | Page 17

$ 2.0 million and $ 3.9 million, respectively.

The increase in amortization expense in the current year is a result of the amortization of ZILRETTA for osteoarthritis knee pain acquired as part of the Flexion Acquisition in November 2021.

Assuming no changes in the gross carrying amount of these intangible assets, the future estimated amortization expense on the finite-lived intangible assets will be $ 28.6 million for the remaining six months of 2022, $ 57.3 million from 2023 to 2030, $ 37.4 million in 2031, $ 7.9 million in 2032 and $ 2.2 million in 2033.

Assuming no changes in the gross carrying amount of these intangible assets, the future estimated amortization expense on the finite-lived intangible assets will be $ 14.3 million for the remaining three months of 2022, $ 57.3 million from 2023 to 2030, $ 37.4 million in 2031, $ 7.9 million in 2032 and $ 2.2 million in 2033.

The Company reviews its long-lived assets for impairment whenever an event or change in circumstances arise that indicate the carrying amount of an asset group is at risk of not being recoverable.

A triggering event was identified for the ZILRETTA asset group due to a reduction in the near-term projected cash flows from the ZILRETTA product.

During the three months ended June 30, 2022, a triggering event was identified for the ZILRETTA asset group due to a reduction in the near-term projected cash flows from the ZILRETTA product.

The Company completed an impairment assessment through a recoverability test at June 30, 2022 by comparing the net carrying value of ZILRETTA asset group against the undiscounted net cash flows expected to be generated from ZILRETTA.

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

June 30, December 31,

September 30, December 31,

Term loan B facility maturing December 2026 $ 343,719 $ 359,497

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

June 30, December 31,

September 30, December 31,

Term Loan maturing December 2026 $ 356,250 $ 375,000

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

During the three and six months ended June 30, 2022, the Company made a scheduled principal payment of $ 9.4 million.

During the nine months ended September 30, 2022, the Company made scheduled principal payments of $ 18.8 million in the aggregate.

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,

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| Q3 2022 Form 10-Q | Page 18

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

As of June 30, 2022, the Company was in compliance with all financial covenants under the Credit Agreement.

events of default and other provisions.

As of September 30, 2022, 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.

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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) the Prime Rate (as defined in the Credit Agreement) in effect on such day, (ii) the 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 June 30, 2022, borrowings under the Term Loan consisted entirely of term benchmark borrowings at a rate of 7.81 %.

As of September 30, 2022, borrowings under the Term Loan consisted entirely of term benchmark borrowings at a rate of 9.21 %.

Convertible Senior Notes Due 2025

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

June 30, December 31,

September 30, December 31,

0.750 % convertible senior notes due August 2025

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Holders may convert the 2025 Notes at any time prior to February 3, 2025, 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 130 % of the conversion price then applicable for at least 20 out of the last 30 consecutive trading days of the quarter.

During the quarter ended June 30, 2022, this condition for conversion was not met.

During the quarter ended September 30, 2022, this condition for conversion was not met.

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

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

As of June 30, 2022, the 2025 Notes had a market price o f $1,038 pe r $1,000 principal amount.

As of September 30, 2022, the 2025 Notes had a market price o f $993 pe r $1,000 principal amount.

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

Upon the receipt of conversion requests, the settlement of the 2025 Notes will be paid pursuant to the terms of the 2025 Indenture.

In the event that all of the 2025 Notes are converted, the Company would be required to repay the

In the event that all of the 2025 Notes are converted, the Company would be required to repay the $ 402.5 million in principal value and any conversion premium in any combination of cash and shares of its common stock (at the Company’s option).

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

On or after August 1, 2023 (but, in the case of a redemption of less than all of the outstanding 2025 Notes, no later than the 40 th scheduled trading day immediately before the

Pacira BioSciences, Inc.

| Q3 2022 Form 10-Q | Page 19

$ 402.5 million in principal value and any conversion premium in any combination of cash and shares of its common stock (at the Company’s option).

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

On or after August 1, 2023 (but, in the case of a redemption of less than all of the outstanding 2025 Notes, no later than the 40 th scheduled trading day immediately before the maturity date), the Company may redeem for cash all or part of the 2025 Notes if the last reported sale price (as defined in the 2025 Indenture) of the Company’s common stock has been at least 130 % of the conversion price then in effect for (i) each of at least 20 trading days (whether or not consecutive) during any 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related notice of redemption and (ii) the trading day immediately before the date the Company sends such notice.

maturity date), the Company may redeem for cash all or part of the 2025 Notes if the last reported sale price (as defined in the 2025 Indenture) of the Company’s common stock has been at least 130 % of the conversion price then in effect for (i) each of at least 20 trading days (whether or not consecutive) during any 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related notice of redemption and (ii) the trading day immediately before the date the Company sends such notice.

The redemption price will equal the sum of (i) 100 % of the principal amount of the 2025 Notes being redeemed, plus (ii) accrued and unpaid interest, including additional interest, if any, to, but excluding, the redemption date.

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No sinking fund is provided for the 2025 Notes.

While the 2025 Notes are currently classified on the Company’s condensed consolidated balance sheet at June 30, 2022 as long-term debt, the future convertibility and resulting balance sheet classification of this liability is monitored at each quarterly reporting date and is analyzed dependent upon market prices of the Company’s common stock during the prescribed measurement periods.

While the 2025 Notes are currently classified on the Company’s condensed consolidated balance sheet at September 30, 2022 as long-term debt, the future convertibility and resulting balance sheet classification of this liability is monitored at each quarterly reporting date and is analyzed dependent upon market prices of the Company’s common stock during the prescribed measurement periods.

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

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

At June 30, 2022, the remaining principal outstanding is $ 8.6 million.

At September 30, 2022, the remaining principal outstanding is $ 8.6 million.

Pacira BioSciences, Inc.

5 unchanged sentences

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

June 30, December 31,

September 30, December 31,

2.375 % convertible senior notes due April 2022

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Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

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

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

At June 30, 2022, the carrying values and fair values of the following financial assets and liabilities were as follows (in thousands):

The carrying amounts of convertible notes receivable without readily determinable fair values have not been adjusted for either an impairment or upward or downward adjustments based on observable transactions, whereas an equity investment was fully impaired during the three months ended September 30, 2022.

At September 30, 2022, the carrying values and fair values of the following financial assets and liabilities were as follows (in thousands):

Carrying Value Fair Value Measurements Using

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$ 8,641 $ — $ 8,649 $ —

(1) The closing price of the Company’s common stock as reported on the Nasdaq Global Select Market was $ 58.30 per share at June 30, 2022 compared to a conversion price of $ 71.78 per share.

Therefore, at June 30, 2022, the conversion price was above the stock price.

(1) The closing price of the Company’s common stock as reported on the Nasdaq Global Select Market was $ 53.19 per share at September 30, 2022 compared to a conversion price of $ 71.78 per share.

Therefore, at September 30, 2022, the conversion price was above the stock price.

The maximum conversion premium that could have been due on the 2025 Notes is 5.6 million shares of the Company’s common stock, which assumes no increase in the conversion rate for certain corporate events.

8 unchanged sentences

Purchases 12,967 4,220 17,187

Divestiture of investment ( 11,642 ) — ( 11,642 )

Foreign currency adjustments — ( 88 ) ( 88 )

Balance at June 30, 2022

Balance at December 31, 2021

$ 14,127 $ 4,132 $ 18,259

Purchases 11,750 1,250 13,000

Impairment ( 10,000 ) — ( 10,000 )

Foreign currency adjustments — ( 158 ) ( 158 )

Balance at September 30, 2022

$ 15,877 $ 5,224 $ 21,101

During the three and nine months ended September 30, 2022, an impairment of an equity investment of $ 10.0 million was recorded within other, net in the condensed consolidated statements of operations.

During the nine months ended September 30, 2021, the Company sold an equity investment 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 condensed consolidated statements of operations.

The fair value of the divested equity investment was based on a Level 1 input.

Pacira BioSciences, Inc.

1 unchanged sentence

Acquisition-Related Contingent Consideration

The Company has recognized contingent consideration related to the Flexion Acquisition and the MyoScience Acquisition in the amount of $ 35.2 million and $ 57.6 million as of June 30, 2022 and December 31, 2021, respectively.

The Company has recognized contingent consideration related to the Flexion Acquisition and the MyoScience Acquisition in the amount of $ 34.2 million and $ 57.6 million as of September 30, 2022 and December 31, 2021, respectively.

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

6 unchanged sentences

For the period from the date of the Flexion Acquisition through December 31, 2021, the Company recorded an additional $ 1.2 million liability.

During the three and six months ended June 30, 2022 , the Company recorded gains of $ 12.5 million and $ 13.3 million, respectively, primarily due to adjustments to near-term forecasts for the earnout period of the contingent consideration.

During the three and nine months ended September 30, 2022 , the Company recorded gains of $ 0.5 million and $ 13.8 million, respectively, primarily due to adjustments to near-term forecasts for the earnout period of the contingent consideration.

These adjustments were recorded as acquisition-related gains in the condensed consolidated statements of operations.

At June 30, 2022, the weighted average discount rate was 13.5 % and the weighted average probability of success for regulatory milestones was 11.1 %.

As of June 30, 2022 and December 31, 2021, a contingent consideration liability related to the Flexion Acquisition was recognized in the amount of $ 33.1 million and $ 46.4 million, respectively.

At September 30, 2022, the weighted average discount rate was 14.4 % and the probability of success for the remaining regulatory milestone was 20.0 %.

As of September 30, 2022 and December 31, 2021, a contingent consideration liability related to the Flexion Acquisition was recognized in the amount of $ 32.6 million and $ 46.4 million, respectively.

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

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.

As of June 30, 2022, the maximum potential remaining milestone payments to be paid are $ 43.0 million.

The Company recognized contingent consideration gains of $ 8.8 million and $ 9.0 million during the three and six months ended June 30, 2022 , respectively, due to the reduced probability of meeting the contingent consideration milestones by December 31, 2023, the expiration date for achieving the milestones.

The Company recognized a $ 0.1 million contingent consideration charge and a $ 1.0 million gain during the three and six months ended June 30, 2021 , respectively .

At June 30, 2022, the weighted average discount rate was 12.5 % and the probability of success for the regulatory milestone that has not yet been met was reduced to zero .

As of June 30, 2022 and December 31, 2021, a contingent consideration liability related to the MyoScience Acquisition has been recognized in the amounts of $ 2.1 million and $ 11.2 million, respectively.

As of September 30, 2022, the maximum potential remaining milestone payments to be paid are $ 43.0 million.

The Company recognized contingent consideration gains of $ 0.5 million and $ 9.6 million during the three and nine months ended September 30, 2022 , respectively, due to the reduced probability of meeting the contingent consideration milestones by December 31, 2023, the expiration date for achieving the milestones.

The Company recognized contingent consideration gains of $ 1.2 million and $ 2.1 million during the three and nine months ended September 30, 2021 , respectively .

At September 30, 2022, the weighted average discount rate was 12.8 % and the probability of success for the regulatory milestone that has not yet been met was reduced to zero .

As of September 30, 2022 and December 31, 2021, a contingent consideration liability related to the MyoScience Acquisition has been recognized in the amounts of $ 1.6 million and $ 11.2 million, respectively.

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

1 unchanged sentence

Utilized as of

June 30, 2022

September 30, 2022

MyoScience Ranges

Utilized as of

June 30, 2022

September 30, 2022

Discount rates 13.98 % to 14.77 %

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Fair value adjustments and accretion ( 23,394 )

Balance at June 30, 2022

Balance at September 30, 2022

Pacira BioSciences, Inc.

1 unchanged sentence

Available-for-Sale Investments

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.

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

Noncurrent investments consist of federal agency 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 investments are reported in other comprehensive income (loss).

At June 30, 2022 and December 31, 2021, all of the Company’s short-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 September 30, 2022 and December 31, 2021, all of the Company’s short-term and noncurrent investments are classified as available-for-sale investments and are determined to be Level 2 instruments, which are measured at fair value using standard industry models with observable inputs.

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

2 unchanged sentences

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

The following summarizes the Company’s short-term available-for-sale investments at June 30, 2022 and December 31, 2021 (in thousands):

June 30, 2022 Investments

The following summarizes the Company’s short-term and noncurrent available-for-sale investments at September 30, 2022 and December 31, 2021 (in thousands):

September 30, 2022 Investments

Losses Fair Value

2 unchanged sentences

Corporate bonds 2,000 — — 2,000

federal agency bonds 24,474 — ( 160 ) 24,314

government bonds 2,006 — ( 23 ) 1,983

Subtotal 220,514 — ( 1,213 ) 219,301

federal agency bonds 17,496 — ( 102 ) 17,394

Total $ 238,010 $ — $ ( 1,315 ) $ 236,695

5 unchanged sentences

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

At June 30, 2022, there were no investments available for sale that were materially less than their amortized cost.

At September 30, 2022, 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 June 30, 2022 and December 31, 2021, the interest receivable recognized in prepaid expenses and other current assets was $ 0.2 million and $ 0.1 million, respectively.

At September 30, 2022 and December 31, 2021, the interest receivable recognized in prepaid expenses and other current assets was $ 0.4 million and $ 0.1 million, respectively.

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

1 unchanged sentence

Such amounts may exceed federally-insured limits.

As of June 30, 2022, three wholesalers each accounted for over 10% of the Company’s accounts receivable, at 34 %, 17 % and 17 %.

As of September 30, 2022, three wholesalers each accounted for over 10% of the Company’s accounts receivable, at 33 %, 18 % and 18 %.

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

2 unchanged sentences

The Company performs ongoing credit evaluations of its customers as warranted and generally does not require collateral.

Allowances for credit losses on the Company’s accounts receivable are maintained based on historical payment patterns, current and estimated future economic conditions, aging of accounts receivable and its write-off history.

As of June 30, 2022 and December 31, 2021, the Company did no t deem any allowances for credit losses on its accounts receivable necessary.

Allowances for credit losses on the

Pacira BioSciences, Inc.

| Q3 2022 Form 10-Q | Page 24

Company’s accounts receivable are maintained based on historical payment patterns, current and estimated future economic conditions, aging of accounts receivable and its write-off history.

As of September 30, 2022 and December 31, 2021, the Company did no t deem any allowances for credit losses on its accounts receivable necessary.

NOTE 11— STOCKHOLDERS’ EQUITY

6 unchanged sentences

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

( 1,056 ) — ( 1,056 )

Foreign currency translation adjustments — 219 219

Balance at June 30, 2022

Balance at September 30, 2022

$ ( 917 ) $ 247 $ ( 670 )

4 unchanged sentences

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

( 168 ) — ( 168 )

Foreign currency translation adjustments — 3 3

Balance at June 30, 2021

Balance at September 30, 2021

$ 151 $ 2 $ 153

(1) Net of a $ 0.3 million and $ 0.1 million tax benefit for the nine months ended September 30, 2022 and 2021, respectively.

NOTE 12— STOCK PLANS

2 unchanged sentences

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

11 unchanged sentences

Equity Awards

The following tables contain information about the Company’s stock option and restricted stock unit, or RSU, activity for the six months ended June 30, 2022:

The following tables contain information about the Company’s stock option and restricted stock unit, or RSU, activity for the nine months ended September 30, 2022:

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

5 unchanged sentences

Expired ( 24,447 ) 78.76

Outstanding at June 30, 2022

Outstanding at September 30, 2022

6,303,617 52.41

5 unchanged sentences

Forfeited ( 68,000 ) 55.04

Unvested at June 30, 2022

Unvested at September 30, 2022

1,162,155 57.38

The weighted average fair value of stock options granted during the six months ended June 30, 2022 wa s $ 25.69 per share.

The weighted average fair value of stock options granted during the nine months ended September 30, 2022 wa s $ 25.66 per share.

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

Black-Scholes Weighted Average Assumption Six Months Ended June 30, 2022

Black-Scholes Weighted Average Assumption Nine Months Ended September 30, 2022

Expected dividend yield None

7 unchanged sentences

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

During the six months ended June 30, 2022, 36,729 shares were purchased and issued through the ESPP.

During the nine months ended September 30, 2022, 36,729 shares were purchased and issued through the ESPP.

Pacira BioSciences, Inc.

11 unchanged sentences

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

The following table sets forth the computation of basic and diluted net income per common share for the three and six mon ths ended June 30, 2022 and 2021 (in thousands, except per share amounts):

As the Company reported a net loss for the three months ended September 30, 2022, no potentially dilutive securities have been included in the computation of diluted net loss per share for that period.

The following table sets forth the computation of basic and diluted net income (loss) per common share for the three and nine mon ths ended September 30, 2022 and 2021 (in thousands, except per share amounts):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Net income—basic $ 19,876 $ 19,081 $ 26,704 $ 29,450

Net (loss) income—basic $ ( 693 ) $ 17,660 $ 26,011 $ 47,110

ASU 2020-06 convertible notes if-converted method adjustment — — 3,112 —

Adjusted net income—diluted 20,915 19,081 28,782 29,450

Adjusted net (loss) income—diluted ( 693 ) 17,660 29,123 47,110

Weighted average common shares outstanding—basic 45,831 44,476 45,400 44,151

6 unchanged sentences

Weighted average common shares outstanding—diluted 45,831 45,463 52,220 45,674

Net income per share:

Basic net income per common share $ 0.44 $ 0.43 $ 0.59 $ 0.67

Diluted net income per common share $ 0.40 $ 0.42 $ 0.55 $ 0.64

Net (loss) income per share:

Basic net (loss) income per common share $ ( 0.02 ) $ 0.40 $ 0.57 $ 1.07

Diluted net (loss) income per common share $ ( 0.02 ) $ 0.39 $ 0.56 $ 1.03

Pacira BioSciences, Inc.

| Q3 2022 Form 10-Q | Page 27

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

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

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

2 unchanged sentences

Weighted average number of RSUs 1,180 369 277 132

Weighted average ESPP purchase options — 26 — 9

Total 13,132 3,102 3,513 2,036

NOTE 14— INCOME TAXES

Income before income taxes and income tax expense is as follows (dollar amounts in thousands):

Income before income taxes and income tax expense are as follows (dollar amounts in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

Income (loss) before income taxes:

Income before income taxes:

Domestic $ 9,230 $ 25,167 $ 39,610 $ 66,962

3 unchanged sentences

Effective tax rate 133 % 27 % 17 % 25 %

The Company’s income tax expense represents the estimated annual effective tax rate applied to the year-to-date domestic operating results adjusted for certain discrete tax items.

The Company’s effective tax rates for the three and six months ended June 30, 2022 include benefits related to stock-based compensation, a first quarter Skyepharma milestone payment and a fair value adjustment for Flexion contingent consideration, partially offset by non-deductible executive compensation costs and a valuation allowance against non-U.S.

The Company’s effective tax rates for the three and six months ended June 30, 2021 include benefits related to stock-based compensation offset by non-deductible executive compensation costs and valuation allowances recorded against deductible capital losses and non-U.S.

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

Acquisition-related (gains) charges, product discontinuation and other for the three and six months ended June 30, 2022 and 2021 summarized below (in thousands):

The Company’s income tax expense represents the estimated annual effective tax rate applied to the year-to-date domestic operating re sults adjusted for certain discrete tax items.

The Company’s effective tax rates for the three months ended September 30, 2022 and September 30, 2021 include non-deductible executive compensation and valuation allowances recorded against non-U.S.

results and deductible capital losses.

The three months ended September 30, 2022 also includes benefits for a first quarter Skyepharma milestone payment and a fair value adjustment for Flexion contingent consideration.

The Company’s effective tax rates for the nine months ended September 30, 2022 and September 30, 2021 include non-deductible executive co mpensation costs and valuation allowances recorded against non-U.S.

results and deductible capital losses, offset by benefits related to stock based compensation.

The nine months ended September 30, 2022 also include benefits for a first quarter Skyepharma milestone payment and a fair value adjustment for Flexion contingent consideration.

Pacira BioSciences, Inc.

| Q3 2022 Form 10-Q | Page 28

NOTE 15— ACQUISITION–RELATED CHARGES (GAINS) AND OTHER

Acquisition-related charges (gains) and other for the three and nine months ended September 30, 2022 and 2021 summarized below (in thousands):

Three Months Ended

June 30, Six Months Ended

September 30, Nine Months Ended

September 30,

2022 2021 2022 2021

7 unchanged sentences

agreement dissolution costs — — — 3,000

Total acquisition-related (gains) charges, product discontinuation and other $ ( 18,058 ) $ 146 $ ( 13,721 ) $ 2,019

Pacira BioSciences, Inc.

| Q2 2022 Form 10-Q | Page 28

Total acquisition-related charges (gains) and other $ 489 $ 237 $ ( 13,232 ) $ 2,256

Flexion Acquisition

The Company recognized acquisition-related costs of $ 3.2 million and $ 8.6 million during the three and six months ended June 30, 2022, respectively , primarily for severance, legal fees, third-party services and other one-time charges related to the Flexion Acquisition.

The Company recognized acquisition-related costs of $ 1.5 million and $ 10.2 million during the three and nine months ended September 30, 2022, respectively , primarily for severance, legal fees, third-party services and other one-time charges related to the Flexion Acquisition.

The Company recognized acquisition-related costs of $ 1.0 million during the three and nine months ended September 30, 2021 primarily related to legal fees.

See Note 4 , Flexion Acquisition , for more information.

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 potential achievement of meeting regulatory and sales-based milestones.

During the three and six months ended June 30, 2022 , the Company recorded $ 12.5 million and $ 13.3 million gains, respectively, due to a decrease to the fair value of its contingent consideration, which was included in acquisition-related (gains) charges in the condensed consolidated statements of operations.

During the three and nine months ended September 30, 2022 , the Company recorded $ 0.5 million and $ 13.8 million gains, respectively, due to a decrease to the fair value of its contingent consideration.

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

MyoScience Acquisition

The Company recognized $ 8.8 million and $ 9.0 million contingent consideration gains during the three and six months ended June 30, 2022 , respectively .

The Company recognized a $ 0.1 million contingent consideration charge and a $ 1.0 million gain during the three and six months ended June 30, 2021 , respectively .

The Company recognized $ 0.5 million and $ 9.6 million contingent consideration gains during the three and nine months ended September 30, 2022 , respectively .

The Company recognized $ 1.2 million and $ 2.1 million contingent consideration gains during the three and nine months ended September 30, 2021 , respectively .

The Company recognized acquisition-related costs of $ 0.4 million during the three and nine months ended September 30, 2021 primarily related to one-time termination benefits fees.

Nuance Biotech Co.

2 unchanged sentences

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 other operating expenses in the condensed consolidated statements of operations for the six months ended June 30, 2021.

Pacira BioSciences, Inc.

| Q3 2022 Form 10-Q | Page 29

NOTE 16— COMMITMENTS AND CONTINGENCIES

13 unchanged sentences

11,033,495 (the ’495 patent).

Pacira BioSciences, Inc.

| Q2 2022 Form 10-Q | Page 29

In November 2021, the Company filed a patent infringement suit against eVenus and its parent company in the U.S.

11 unchanged sentences

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.

These litigations are in their early stages, and the Company is unable to predict the outcome of this action at this time.

Research Development Foundation

7 unchanged sentences

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.

The lawsuit seeks a

Pacira BioSciences, Inc.

| Q3 2022 Form 10-Q | Page 30

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.

14 unchanged sentences

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

Pacira BioSciences, Inc.

| Q2 2022 Form 10-Q | Page 30

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 in other liabilities as of June 30, 2022 and December 31, 2021.

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 in other liabilities as of December 31, 2021.

The Company was also eligible to receive up to $ 32.5 million in aggregate development, regulatory and commercial sales milestone payments under the exclusive license agreement.

3 unchanged sentences

Unless terminated earlier in accordance with its terms, the license agreement was scheduled to continue in effect in perpetuity or as long as HK Tainuo or Jiangsu Tainuo continued to sell ZILRETTA in Greater China.

Subsequently, in July 2022, the Company submitted a termination letter to HK Tainuo associated with this license agreement.

In July 2022, the Company submitted a letter to HK Tainuo associated with this license agreement seeking a mutual decision to end the licensing agreement.

As of September 30, 2022, $ 10.0 million was recognized as part of acquisition accounting within other liabilities in the condensed consolidated balance sheet related to this matter.

Pacira BioSciences, Inc.

41 unchanged sentences

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

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

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

Since its initial approval in 2011, more than 11 million patients have been treated with EXPAREL.

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

With the acquisition (the “Flexion Acquisition”) of Flexion Therapeutics, Inc.

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

With the acquisition of Flexion Therapeutics, Inc.

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

With the acquisition of MyoScience, Inc.

(the “MyoScience Acquisition” ) in April 2019, we acquired iovera° ® , a handheld cryoanalgesia device used to deliver a precise, controlled application of cold temperature only to targeted nerves, which we sell directly to end users.

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

We also believe ZILRETTA is highly complementary to iovera°.

(the “MyoScience Acquisition” ) in April 2019, we acquired iovera° ® , a handheld cryoanalgesia device used to deliver a precise, controlled application of cold temperature to targeted nerves, which we sell directly to end users.

EXPAREL, ZILRETTA and the iovera° system are highly complementary products as long-acting, non-opioid therapies that alleviate pain.

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

28 unchanged sentences

Recent Highlights

Patent and Trademark Office issued Patent Nos.

11,304,904, and 11,311,486 in April 2022, and issued Patent No.

11,357,727 in June 2022.

The ’904, ’486, and ’727 patents are listed in the FDA Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”).

With these three new patents, there are currently six EXPAREL patents listed in the Orange Book, each with an expiration date of January 22, 2041.

• In June 2022, we announced the launch of a partnership with the National Safety Council, or NSC, and the Connect2Prevent program.

Connect2Prevent is an innovative employee-family educational program that increases awareness and prevention of opioid addiction.

The NSC created a comprehensive curriculum designed to educate employees on the risks associated with opioids and provide them with the tools to have meaningful discussions with adolescent family members.

The curriculum includes 10-12 weeks of engaging lessons on opioids, addiction, stigma, risk factors for substance use, refusal skills, harm reduction, how to talk to doctors about opioid alternatives and more.

The lessons provide easy-to-understand education, action steps and evidence-based tools to connect and communicate with teens.

• In August 2022, we announced the completion of patient enrollment in our two Phase 3 studies of EXPAREL as a nerve block in lower extremity surgeries.

The first study is evaluating EXPAREL as an adductor canal block for total knee arthroplasty, or TKA, and the second is evaluating EXPAREL as a popliteal sciatic nerve block for bunionectomy.

We believe positive results from these studies will form the basis for an sNDA submission seeking label expansion to include lower extremity nerve blocks.

Patent and Trademark Office, or USPTO, issued Patent No.

11,452,691 in October 2022, which is a chemical composition patent and was submitted in the FDA Approved Drug Products with Therapeutic Equivalence Evaluations (the “Orange Book”).

With this patent, there are eight EXPAREL patents listed in the Orange Book, each with an expiration date of January 22, 2041.

We also received a Notice of Allowance from the USPTO for a U.S.

Patent Application that is a product by process patent for EXPAREL.

After issuance, we will submit this patent for listing in the Orange Book.

• In September 2022, we announced positive topline results from two Phase 3 registration studies of EXPAREL as a single-dose nerve block for postsurgical regional analgesia in lower extremity surgeries.

The first study, which evaluated EXPAREL as a femoral nerve block in the adductor canal in patients undergoing total knee arthroplasty, or TKA, achieved the primary endpoint demonstrating a statistically significant reduction in cumulative pain scores from 0 to 96 hours compared with bupivacaine HCl (p<0.01).

EXPAREL also achieved a statistically significant reduction in postsurgical opioid consumption through 96 hours (p<0.01) compared with bupivacaine HCl, a key secondary endpoint.

The second study, which evaluated EXPAREL as a sciatic nerve block in the popliteal fossa in patients undergoing bunionectomy, achieved the primary endpoint by demonstrating a statistically significant reduction in cumulative pain scores from 0 to 96 hours compared with bupivacaine HCl (p<0.00001).

EXPAREL also achieved statistically significant reductions in postsurgical opioid consumption (p<0.00001) and percentage of opioid-free subjects (p<0.001) through 96 hours compared with bupivacaine HCl, which were key secondary endpoints.

EXPAREL was well tolerated with a safety profile consistent with bupivacaine HCl.

With these positive results, we plan to submit an sNDA to the FDA early next year seeking expansion of the EXPAREL label to include femoral nerve block in the adductor canal.

• In September 2022, we announced that the EMA’s Committee for Medicinal Products for Human Use (CHMP) adopted a positive opinion recommending marketing authorization for an expanded indication of EXPAREL to include use in children aged 6 years and older as a field block for treatment of somatic post-operative pain from small- to medium-sized surgical wounds.

We expect a decision from the European Commission, or EC, on the expanded indication in November 2022.

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

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

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

member states plus Iceland, Norway and Liechtenstein.

The data is still under review in the U.K.

EXPAREL was initially approved by the EC and in the U.K.

in November 2020 as a brachial plexus block or femoral nerve block for treatment of post-operative pain in adults, and as a field block for treatment of somatic post-operative pain from small- to medium-sized surgical wounds in adults.

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

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• Lower extremity nerve block.

We have completed enrollment in two Phase 3 registration studies of EXPAREL as a nerve block in lower extremity surgeries.

One is a popliteal sciatic nerve block for bunionectomy and the second is an adductor canal block for TKA.

We believe positive results from these studies will form the basis for an sNDA submission seeking label expansion to include lower extremity nerve blocks.

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

We have completed two Phase 3 registration studies of EXPAREL as a nerve block in lower extremity surgeries.

In September 2022, we announced positive topline results from two Phase 3 registration studies of EXPAREL as a single-dose nerve block for postsurgical regional analgesia in lower extremity surgeries.

The first study, which evaluated EXPAREL as a femoral nerve block in the adductor canal in patients undergoing TKA

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achieved the primary endpoint demonstrating a statistically significant reduction in cumulative pain scores from 0 to 96 hours compared with bupivacaine HCl (p<0.01).

EXPAREL also achieved a statistically significant reduction in postsurgical opioid consumption through 96 hours (p<0.01) compared with bupivacaine HCl, a key secondary endpoint.

EXPAREL was well tolerated with a safety profile consistent with bupivacaine HCl.

With these positive results, we plan to submit an sNDA to the FDA early next year seeking expansion of the EXPAREL label to include femoral nerve block in the adductor canal.

• Pediatrics.

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We are also discussing our regulatory strategy for EXPAREL administered as a nerve block in the pediatric setting.

We are working with both the FDA and the European Medicines Agency, or EMA, with the goal of harmonizing our pediatric clinical studies as much as possible between the two regions.

We are working with both the FDA and the EMA with the goal of harmonizing our pediatric clinical studies between the two regions.

• Stellate ganglion block.

Planning is underway for a multicenter registration study of EXPAREL as a stellate ganglion block for treating refractory cardiac ventricular dysrhythmias and for use to prevent postoperative atrial fibrillation after open heart surgery.

We are working with a steering committee of Key Opinion Leaders in regional anesthesia and

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stellate ganglion blocks who will convene later this year to help finalize study design.

After an FDA meeting to align on our regulatory strategy for expanding the EXPAREL label to include stellate ganglion block, we expect to proceed with a registration trial.

We are working with a steering committee of Key Opinion Leaders in regional anesthesia and stellate ganglion blocks to help finalize study design.

After we meet with the FDA to align on our regulatory strategy for expanding the EXPAREL label to include stellate ganglion block, we expect to proceed with a registration trial.

We believe a stellate ganglion block utilizing EXPAREL will last for several days and address a significant unmet need in patients with ventricular and atrial dysrhythmias.

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We have prioritized the European and Latin American markets for global expansion.

In Europe, we were granted marketing authorization by the EC in November 2020 for EXPAREL as a brachial plexus block or femoral nerve block for treatment of post-operating pain in adults and as a field block for treatment of somatic post-operative pain from small- to medium-sized surgical wounds in adults, and in September 2022, we received a positive opinion recommending an expanded indication to include children aged 6 years or older as a field block for treatment of somatic post-operative pain from small- to medium-sized surgical wounds.

We launched EXPAREL in the U.K.

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shortly thereafter.

We market ZILRETTA through our ZILRETTA and iovera° sales force of approximately 50 Treatment Solutions Managers who are providing clinicians with two unique OA treatment options to individualize patient care.

ZILRETTA is the first and only extended-release, intra-articular therapy for patients confronting OA knee pain.

We market ZILRETTA through our ZILRETTA and iovera° sales force of approximately 50 Treatment Solutions Managers who are providing clinicians with two complementary and standalone non-opioid solutions for managing OA pain.

ZILRETTA is the first and only extended-release, intra-articular therapy for OA knee pain.

ZILRETTA employs a proprietary microsphere technology combining triamcinolone acetonide, or TA, a commonly administered, immediate-release corticosteroid, with a poly lactic-co-glycolic acid, or PLGA, matrix to provide extended pain relief.

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In addition, we are planning a study comparing ZILRETTA to immediate release triamcinolone acetonide in patients with Type 2 diabetes and are evaluating a repeat dosing study.

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ZILRETTA Clinical Benefits

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The pivotal Phase 3 trial, on which the approval of ZILRETTA was based, showed that ZILRETTA significantly reduced OA knee pain for 12 weeks, with some people experiencing pain relief through Week 16.

Both the magnitude and duration of pain relief provided by ZILRETTA in clinical trials were clinically meaningful with the magnitude of pain relief amongst the largest seen to date in OA clinical trials.

Both the magnitude and duration of pain relief provided by ZILRETTA in clinical trials were clinically meaningful with the magnitude of pain relief among the largest seen to date in OA clinical trials.

The overall frequency of treatment-related adverse events in these trials was similar to those observed with placebo, and no drug-related serious adverse events were reported.

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In September 2021, the American Association of Orthopaedic Surgeons, or AAOS, updated its evidence-based clinical practice guidelines, finding ZILRETTA can improve patient outcomes over traditional immediate-release corticosteroids.

The iovera° system is an FDA-approved, non-opioid handheld cryoanalgesia device used to produce precise, controlled doses of cold temperature only to targeted nerves.

The iovera° system is an FDA-approved, non-opioid handheld cryoanalgesia device used to produce precise, controlled doses of cold temperature to targeted nerves.

It has been FDA 510(k) cleared in the U.S., has a CE mark in the E.U.

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

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iovera° Clinical Benefits

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In September 2021, the AAOS updated its evidence-based clinical practice guidelines, reporting that denervation therapy—including cryoneurolysis—may reduce knee pain and improve function in patients with symptomatic OA of the knee.

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We are also encouraged by usage of iovera° in other areas.

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Clinical Development Programs

PCRX-201 and PCRX-301 (Formerly FX-201 and FX-301)

PCRX-201 and PCRX-301 were added to our portfolio as part of the Flexion Acquisition.

PCRX-201 (Formerly FX-201)

PCRX-201 was added to our portfolio as part of the Flexion Acquisition.

PCRX-201 is a gene therapy product candidate designed to provide “on demand” production of an anti-inflammatory protein, interleukin-1 receptor antagonist (IL-1Ra) whenever inflammation is detected in the joint.

Based upon very compelling initial Phase 1 efficacy and safety data for PCRX-201, we are working with investigators and plan to request an FDA meeting to discuss the regulatory pathway forward for OA of the knee—a very important and exciting addition to our durable non-opioid pain management pipeline.

PCRX-301 (Formerly FX-301)

PCRX-301 is a locally administered Na V 1.7 inhibitor, known as funapide, formulated for extended release in a thermosensitive hydrogel.

The initial development of PCRX-301 was intended to support administration as a peripheral analgesic lower extremity nerve block for management of post-operative pain.

In September 2022, based on the results of a completed phase 1 study, we decided to discontinue further development of PCRX-301 due to a lack of clinical efficacy when compared to placebo and issues with the hydrogel formulation.

pMVL-Based Clinical Programs

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Carthronix, Inc.

Preclinical CX-011, an intra-articular injection designed to slow joint degeneration by mediating IL-6 cytokines Knee OA

Coda Therapeutics, Inc.

Preclinical Chemogenetic platform to reverse the aberrant neuronal activity underlying neurological disorders using optimized Adeno-Associated Virus (AAV) vectors

Neuropathic pain

Genascence Corporation Phase 1 AAV vector-based gene therapy targeting Interleukin 1 Receptor Antagonist (IL-1Ra)

GeneQuine Biotherapeutics GmbH Preclinical Next-generation gene transfer vehicles that enter joint cells to confer multi-year gene expression

Phase 1-Ready CX-011, an intra-articular injection designed to slow joint degeneration by mediating IL-6 cytokines Knee OA

Genascence Corporation Phase 2-Ready AAV vector-based gene therapy targeting Interleukin 1 Receptor Antagonist (IL-1Ra)

GeneQuine Biotherapeutics GmbH Preclinical Helper-dependent adenoviral vectors (HDAd) that enter joint cells to confer multi-year gene expression

OA and other musculoskeletal disorders

Spine BioPharma, LLC Phase 3-ready Remedisc 7-amino acid chain peptide that binds to and induces down regulation of transforming growth factor, beta 1 (TGFβ1)

Spine BioPharma, LLC Phase 3 SB01 7-amino acid chain peptide that binds to and induces down regulation of transforming growth factor, beta 1 (TGFβ1)

Degenerative disc disease

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

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

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

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Pacira Training Facilities

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The PITT consists of approximately 13,000 square-feet of fully adaptable space and is equipped with state-of-the-art technology and audio/visual capabilities and features several distinct training spaces including a simulation lab equipped with seven ultrasound scanning stations;

a lecture hall featuring a 4½-foot tall by 24-foot wide liquid crystal display video wall to support live, virtual and even global presentations;

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

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support live, virtual and even global presentations;

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

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These training centers are core to developing both our physician champions and community-based clinicians who want to stay on the forefront of opioid-sparing pain management.

We expect to open this facility before the end of 2022 which would immediately double our capacity and ability to host programs for EXPAREL, ZILRETTA and iovera°.

We expect to complete this facility before the end of 2022 which would immediately double our capacity and ability to host programs for EXPAREL, ZILRETTA and iovera°.

Results of Operations

Comparison of the Three and Six Months Ended June 30, 2022 and 2021

Net product sales consist of (i) EXPAREL in the U.S., the European Union, or E.U., and the United Kingdom, or U.K.;

Comparison of the Three and Nine Months Ended September 30, 2022 and 2021

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

(ii) ZILRETTA in the U.S.;

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Three Months Ended

June 30, % Increase / (Decrease) Six Months Ended

June 30, % Increase / (Decrease)

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

September 30, % Increase / (Decrease)

2022 2021 2022 2021

1 unchanged sentence

EXPAREL $ 132,642 $ 121,926 9% $ 398,854 $ 366,663 9%

ZILRETTA 27,417 — N/A 51,052 — N/A

26,494 — N/A 77,546 — N/A

iovera° 4,467 4,182 7% 10,694 11,264 (5)%

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Royalty revenue 906 931 (3)% 2,305 1,822 27%

Collaborative licensing and milestone revenue — 125 (100)% — 125 (100)%

Collaborative licensing and milestone revenue — — N/A — 125 (100)%

Total revenues $ 167,466 $ 127,722 31% $ 494,868 $ 382,339 29%

EXPAREL revenue increased 5% and 9% in the three and six months ended June 30, 2022 versus 2021, respectively, primarily due to increases of 3.6% and 7.2% in gross vial volume and increases of 3.7% and 3.8% in gross selling price per

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unit, partially offset by the sales mix of EXPAREL vial sizes.

Although the demand for EXPAREL has continued to increase primarily as a result of Ambulatory Surgical Centers and anesthesiologists broadening the use of long-acting EXPAREL regional approaches as a foundation of multimodal opioid-minimization strategies that enable shifting inpatient procedures to 23-hour sites of care, the elective surgery market has faced additional pandemic-related challenges due to regional surges in COVID-19 variant cases, staffing shortages and fatigue from care teams addressing significant procedure backlogs.

(1) ZILRETTA net product sales began November 19, 2021, the date of the Flexion Acquisition.

EXPAREL revenue increased 9% in the three and nine months ended September 30, 2022 versus 2021 primarily due to increases of 7.2% in gross vial volume in both periods and increases of 3.7% and 3.8% in gross selling price per unit, respectively, partially offset by the sales mix of EXPAREL vial sizes.

Although the demand for EXPAREL has continued to increase primarily as a result of Ambulatory Surgical Centers and anesthesiologists broadening the use of long-acting EXPAREL regional approaches as a foundation of multimodal opioid-minimization strategies that enable shifting inpatient procedures to 23-hour sites of care, the elective surgery market has faced post-pandemic-related challenges due to regional surges in COVID-19 variant cases, staffing shortages and fatigue from care teams addressing significant procedure backlogs.

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

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

We recognized net product sales of $27.4 million and $51.1 million for the three and six months ended June 30, 2022, respectively.

Net product sales of iovera° decreased 16% and 12% in the three and six months ended June 30, 2022 versus 2021, respectively, primarily due to a delay in the transition from generation 1 to generation 2 iovera° products and short-term variations in reimbursement policies in certain territories.

Bupivacaine liposome injectable suspension net product sales decreased and its related royalties increased nominally in the three months ended June 30, 2022 versus 2021.

Bupivacaine liposome injectable suspension net product sales and its related royalties increased in the six months ended June 30, 2022 versus 2021.

These changes versus the prior year periods were due to the timing of orders placed by Aratana Therapeutics, Inc.

We recognized net product sales of $26.5 million and $77.5 million for the three and nine months ended September 30, 2022, respectively.

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Net product sales of iovera° increased 7% in the three months ended September 30, 2022 versus 2021 due to the rollout of generation 2 iovera° products and an increased sales force.

Net product sales of iovera° decreased 5% in the nine months ended September 30, 2022 versus 2021 primarily due to a delay in the transition from generation 1 to generation 2 iovera° products and short-term variations in reimbursement policies in certain territories.

Bupivacaine liposome injectable suspension net product sales increased over 100% in the three and nine months ended September 30, 2022 versus 2021.

Its related royalties decreased nominally in the three months ended September 30, 2022 and increased 27% in the nine months ended September 30, 2022 versus 2021 primarily due to the timing of orders placed by Aratana Therapeutics, Inc.

for veterinary use.

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

The following tables provide a summary of activity with respect to our sales related allowances and accruals related to EXPAREL and ZILRETTA for the six months ended June 30, 2022 and 2021 (in thousands):

June 30, 2022 Returns Allowances Prompt Payment Discounts Service

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

The following tables provide a summary of activity with respect to our sales related allowances and accruals related to EXPAREL and ZILRETTA for the nine months ended September 30, 2022 and 2021 (in thousands):

September 30, 2022 Returns Allowances Prompt Payment Discounts Service

Chargebacks Government Rebates Total

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Payments / Adjustments (2,802) (8,286) (13,069) (29,092) (1,181) (54,430)

Balance at June 30, 2022 $ 1,675 $ 1,108 $ 2,883 $ 3,725 $ 775 $ 10,166

June 30, 2021 Returns Allowances Prompt Payment Discounts Service

Balance at September 30, 2022 $ 1,512 $ 1,105 $ 2,925 $ 4,524 $ 742 $ 10,808

September 30, 2021 Returns Allowances Prompt Payment Discounts Service

Chargebacks Government

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Payments / Adjustments (347) (7,578) (5,870) (8,838) — (22,633)

Balance at June 30, 2021 $ 1,260 $ 1,426 $ 1,128 $ 2,024 $ — $ 5,838

Total reductions of gross product sales from sales-related allowances and accruals were $34.4 million and $15.6 million, or 9.6% and 5.8% of gross product sales, for the six months ended June 30, 2022 and 2021, respectively.

Balance at September 30, 2021 $ 1,407 $ 981 $ 999 $ 2,038 $ — $ 5,425

Total reductions of gross product sales from sales-related allowances and accruals were $52.8 million and $23.3 million, or 9.7% and 5.8% of gross product sales, for the nine months ended September 30, 2022 and 2021, respectively.

The overall increase in sales-related allowances and accruals as a percentage of gross product sales was primarily related to the addition of the ZILRETTA-related allowances and accruals.

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Cost of Goods Sold

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Three Months Ended

June 30, % Increase / (Decrease) Six Months Ended

June 30, % Increase / (Decrease)

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

September 30, % Increase / (Decrease)

2022 2021 2022 2021

1 unchanged sentence

Gross margin 70 % 73 % 72 % 74 %

Gross margin decreased four percentage points in the three months ended June 30, 2022 versus 2021 mainly due to higher EXPAREL inventory reserves due to raw material supply chain delays and the ZILRETTA step-up of fixed assets and inventory to fair value in accordance with purchase accounting.

There was no change in gross margin in the six months ended June 30, 2022 versus 2021, when a two percentage point increase due to the prior period’s unplanned downtime was offset by a two percentage point decrease due to higher EXPAREL inventory reserves attributable to raw material supply chain delays.

Gross margin decreased three percentage points in the three months ended September 30, 2022 versus 2021 primarily due to higher inventory reserves and the ZILRETTA step-up of fixed assets and inventory to fair value in accordance with purchase accounting, partially offset by an increase in gross margin associated with ZILRETTA.

Gross margin decreased two percentage points in the nine months ended September 30, 2022 versus 2021, mainly due to higher inventory reserves and the ZILRETTA step-up of fixed assets and inventory to fair value in accordance with purchase accounting, partially offset by unplanned downtime in the prior period.

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Research and Development Expenses

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Three Months Ended

June 30, % Increase / (Decrease) Six Months Ended

June 30, % Increase / (Decrease)

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

September 30, % Increase / (Decrease)

2022 2021 2022 2021

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% of total revenues 12 % 9 % 14 % 10 %

Total research and development expense increased over 100% and 68% in the three and six months ended June 30, 2022 versus 2021, respectively.

Clinical and preclinical development expense increased over 100% in each of the three and six months ended June 30, 2022 versus 2021, due to the start-up of and continued enrollment in two EXPAREL lower extremity nerve block trials in bunionectomy and TKA and ongoing trials for the product candidates acquired as part of the Flexion Acquisition.

Product development and manufacturing capacity expansion expense increased 10% and 8% in the three and six months ended June 30, 2022 versus 2021, respectively, mainly attributable to the significant scale-up of our EXPAREL manufacturing capacity at our Science Center Campus in San Diego, California.

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Regulatory and other expense increased 28% and 2% in the three and six months ended June 30, 2022 versus 2021, respectively, due to increased support of E.U.

EXPAREL pediatric submissions, partially offset by lower ongoing costs in 2022 related to our iovera° clinical data registry, as compared to start-up expenses incurred in the first half of 2021.

Stock-based compensation increased 14% and 22% in the three and six months ended June 30, 2022 versus 2021, respectively, primarily due to greater equity awards outstanding for research and development personnel.

Total research and development expense increased 68% in the three and nine months ended September 30, 2022 versus 2021.

Clinical and preclinical development expense increased over 100% in each of the three and nine month periods ended September 30, 2022 versus 2021 due to ongoing expenses and completion of two EXPAREL lower extremity nerve block trials in bunionectomy and TKA, ongoing trials for the product candidates acquired as part of the Flexion Acquisition and toxicology studies for product development candidates.

The prior year periods were affected by the COVID-19 pandemic, whereas the current year includes an expanded product candidate pipeline internally and as a result of the Flexion Acquisition.

Product development and manufacturing capacity expansion expense increased 53% and 23% in the three and nine months ended September 30, 2022 versus 2021, respectively, mainly attributable to the significant scale-up of our EXPAREL manufacturing capacity at our Science Center Campus in San Diego, California.

Regulatory and other expense increased 19% in the three months ended September 30, 2022 versus 2021 related to our iovera° clinical data registry.

Regulatory and other expense increased 8% for the nine months ended September 30, 2022 as compared to the same period in 2021 in support of the E.U.

EXPAREL pediatric submission and U.S.

sNDA submission.

Stock-based compensation increased 54% and 33% in the three and nine months ended September 30, 2022 versus 2021, respectively, primarily due to greater equity awards outstanding for research and development personnel.

Selling, General and Administrative Expenses

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Stock-based compensation expense relates to the costs of stock option grants, RSU awards and our ESPP.

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The following table provides information regarding our selling, general and administrative expenses during the periods indicated, including percent changes (dollar amounts in thousands):

Three Months Ended

June 30, % Increase / (Decrease) Six Months Ended

June 30, % Increase / (Decrease)

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

September 30, % Increase / (Decrease)

2022 2021 2022 2021

4 unchanged sentences

% of total revenues 37 % 37 % 39 % 38 %

Total selling, general and administrative expenses increased 28% and 30% in the three and six months ended June 30, 2022 versus 2021, respectively

Sales and marketing expenses increased 30% and 36% in the three and six months ended June 30, 2022 versus 2021, respectively.

The increases were driven by a sales force expansion supporting iovera°, the addition of a sales force to support ZILRETTA and fully staffing a contracted sales force in Europe.

Total selling, general and administrative expense increased 28% and 29% in the three and nine months ended September 30, 2022 versus 2021, respectively

Sales and marketing expenses increased 28% and 33% in the three and nine months ended September 30, 2022 versus 2021, respectively.

The increases were driven by sales force expansion supporting both ZILRETTA and iovera°, following the completion of the Flexion Acquisition in November 2021 and fully staffing a contracted sales force in Europe.

Increases also included expenses for patient reimbursement support for ZILRETTA.

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

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

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

General and administrative expenses increased 32% and 29% in the three and six months ended June 30, 2022 versus 2021, respectively.

The increases were driven by administrative support costs as a result of the Flexion Acquisition in November 2021, including transition expenses during integration, and additional support for our expansion into European markets.

The increase in the six months ended June 30, 2022 also includes legal costs to support intellectual property protection.

Stock-based compensation increased 11% in both the three and six months ended June 30, 2022 and 2021 primarily due to an increase in the number of equity awards outstanding for selling, general and administrative personnel.

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The addition of ZILRETTA to our commercial portfolio provides clinicians with two unique OA treatment options to individualize patient care.

General and administrative expenses increased 36% and 31% in the three and nine months ended September 30, 2022 versus 2021, respectively.

The increases in the three and nine months ended were driven by administrative support costs as a result of the Flexion Acquisition in November 2021, including transition expenses during integration, legal costs to support intellectual property protection and additional support for our expansion into European markets.

Stock-based compensation increased 15% and 12% in the three and nine months ended September 30, 2022 and 2021 primarily due to an increase in the number of equity awards outstanding for selling, general and administrative personnel.

Amortization of Acquired Intangible Assets

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Three Months Ended

June 30, % Increase / (Decrease) Six Months Ended

June 30, % Increase / (Decrease)

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

September 30, % Increase / (Decrease)

2022 2021 2022 2021

Amortization of acquired intangible assets $ 14,322 $ 1,967 100% + $ 42,966 $ 5,900 100% +

Amortization of acquired intangible assets increased substantially in the three and six months ended June 30, 2022 versus 2021 due to the Flexion Acquisition.

Amortization of acquired intangible assets increased substantially in the three and nine months ended September 30, 2022 versus 2021 due to the Flexion Acquisition.

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

For more information, see Note 4, Flexion Acquisition, and Note 8, Goodwill and Intangible Assets , to our condensed consolidated financial statements included herein.

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

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Acquisition-Related Charges (Gains) and Other

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

Three Months Ended

June 30, % Increase / (Decrease) Six Months Ended

June 30, % Increase / (Decrease)

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

September 30, % Increase / (Decrease)

2022 2021 2022 2021

Acquisition-related (gains) charges, net $ (18,058) $ 146 N/A $ (13,721) $ (981) (100)%+

Other — — N/A — 3,000 (100)%

Total acquisition-related (gains) charges, product discontinuation and other $ (18,058) $ 146 N/A $ (13,721) $ 2,019 N/A

Total acquisition-related (gains) charges, product discontinuation and other increased substantially in the three and six months ended June 30, 2022 versus 2021.

During the three and six months ended June 30, 2022, we recognized acquisition-related gains, net of $18.1 million and $13.7 million, respectively.

These gains were primarily driven by reductions in acquisition contingent consideration liabilities due to adjustments to near-term forecasts for the applicable period during which the Flexion contingent consideration may be achieved under the Merger Agreement and due to the reduced probability of meeting the MyoScience contingent consideration milestones by December 31, 2023, the expiration date for achieving the milestones .

These gains were partially offset by severance, legal fees, third-party services and other one-time charges related to the Flexion Acquisition.

For more information, see Note 10, Financial Instruments , and Note 15, Acquisition-Related Charges, Product Discontinuation and Other , to our condensed consolidated financial statements included herein.

In the three and six months ended June 30, 2021, as part of the MyoScience Acquisition, we recognized acquisition-related charges of $0.1 million and gains of $1.0 million, respectively, primarily related to changes in the fair value of contingent consideration.

See Note 10, Financial Instruments , to our condensed consolidated financial statements included herein, for information regarding the methods and key assumptions used in the fair value measurements of contingent consideration.

In June 2018, we entered into an agreement with Nuance Biotech Co.

to advance the development and commercialization of EXPAREL in China.

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

Dissolution costs of $3.0 million were included in other operating expenses in the condensed consolidated statements of operations for the six months ended June 30, 2021.

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Other Income (Expense)

Acquisition-related charges (gains), net $ 489 $ (208) N/A $ (13,232) $ (1,189) 100% +

Other — 445 (100)% — 3,445 (100)%

Total acquisition-related charges (gains) and other $ 489 $ 237 100% + $ (13,232) $ 2,256 N/A

Total acquisition-related charges (gains) and other increased over 100% in the three months ended September 30, 2022 versus 2021.

Total acquisition-related charges (gains) and other decreased substantially in the nine months ended September 30, 2022 versus 2021.

During the three months ended September 30, 2022, we recognized acquisition-related charges, net of $0.5 million.

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

During the nine months ended September 30, 2022, we recognized acquisition-related gains, net of $13.2 million.

These gains were partially offset by severance and other employee related costs, legal and other professional fees, third-party services and other one-time charges associated with the Flexion Acquisition .

For more information, see Note 10, Financial Instruments and Note 15, Acquisition-Related Charges and Other , to our condensed consolidated financial statements included herein.

In the three and nine months ended September 30, 2021, we recognized acquisition-related charges and other charges of $0.2 million and $2.3 million, respectively.

Included in these three and nine month periods, as part of the MyoScience Acquisition, we recognized acquisition-related gains of $1.2 million and $2.1 million, respectively, related to changes in the fair value of contingent consideration.

These gains were offset by acquisition-related charges of $1.4 million in both the three and nine month periods related to severance and acquisition-related fees.

Also included in the nine months ended September 30, 2021 is a $3.0 million charge related to the termination of an agreement with Nuance Biotech Co.

Ltd to advance the development and commercialization of EXPAREL in China due to the lack of a viable regulatory pathway that adequately safeguards our intellectual property against the risk of a generic product.

See Note 10, Financial Instruments and Note 15, Acquisition-Related Charges and Other, to our condensed consolidated financial statements included herein, for more information.

Other (Expense) Income

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

Three Months Ended

June 30, % Increase / (Decrease) Six Months Ended

June 30, % Increase / (Decrease)

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

September 30, % Increase / (Decrease)

2022 2021 2022 2021

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Total other expense, net $ (19,220) (7,202) 100% + $ (38,547) (23,111) 67%

Total other expense, net increased nominally and 21% in the three and six months ended June 30, 2022 versus 2021, respectively.

The 26% and 36% increase in interest expense during the three and six months ended June 30, 2022, respectively, was due to the $375.0 million term loan B credit agreement (the “Term Loan”) entered into in December 2021.

Total other expense, net increased by more than 100% and 67% in the three and nine months ended September 30, 2022 versus 2021, respectively.

Pacira BioSciences, Inc.

| Q3 2022 Form 10-Q | Page 44

The 34% and 36% increase in interest expense during the three and nine months ended September 30, 2022, respectively, was due to the $375.0 million term loan B credit agreement (the “Term Loan”) entered into in December 2021.

This increase was partially offset by the absence of debt discount amortization associated with our convertible notes in the current year due to adopting Accounting Standards Update, or ASU, 2020-06 in 2022, and the maturing of our 2.375% convertible senior notes due 2022, or 2022 Notes, on April 1, 2022.

For additional information regarding the adoption of ASU 2020-06, see Note 2 , Summary of Significant Accounting Policies, to our condensed consolidated financial statements herein.

Other, net in the prior year periods included a realized loss on the sale of an equity investment in the amounts of $2.5 million and $2.6 million during the three and six months ended June 30, 2021, respectively.

The increase in interest expense was slightly offset by increases in interest income in the three and nine months ended September 30, 2022 versus 2021 due to higher interest rates and overall investment balance.

Other, net expense during the three and nine months ended September 30, 2022 included a $10.0 million impairment related to an equity investment.

Other, net for the nine months ended September 30, 2021 included a realized loss on the sale of an equity investment in the amount of $2.6 million.

Income Tax Expense

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Three Months Ended

June 30, % Increase / (Decrease) Six Months Ended

June 30, % Increase / (Decrease)

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

September 30, % Increase / (Decrease)

2022 2021 2022 2021

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Effective tax rate 133 % 27 % 17 % 25 %

The effective tax rates were 10% and 9% for the three and six months ended June 30, 2022, respectively.

The effective tax rates were 26% and 23% for the three and six months ended June 30, 2021, respectively.

The effective tax rates were 133% and 27% for the three months ended September 30, 2022 and September 30, 2021, respectively.

The effective tax rates were 17% and 25% for the nine months ended September 30, 2022 and September 30, 2021, respectively.

Income tax expense represents the estimated annual effective tax rate applied to the year-to-date domestic operating results adjusted for certain discrete tax items.

The effective tax rates for the three and six months ended June 30, 2022 include benefits related to stock-based compensation, a first quarter SkyePharma Holding, Inc., or Skyepharma, (now a subsidiary of Vectura Group plc), milestone payment and a fair value adjustment for Flexion contingent consideration, offset by non-deductible executive compensation costs and a valuation allowance against non-U.S.

The effective tax rates for the three and six months ended June 30, 2021 include benefits related to stock-based compensation offset by non-deductible executive compensation costs and valuation allowances recorded against deductible capital losses and non-U.S.

The effective tax rates for the three months ended September 30, 2022 and September 30, 2021 include non-deductible executive compensation and valuation allowances recorded against non-U.S.

results and capital losses.

The three months ended September 30, 2022 also includes benefits for a first quarter SkyePharma Holding, Inc., or Skyepharma, (now a subsidiary of Vectura Group plc), milestone payment and a fair value adjustment for Flexion contingent consideration.

The effective tax rates for the nine months ended September 30, 2022 and September 30, 2021 include non-deductible executive compensation and valuation allowances recorded against non-U.S.

results and capital losses offset by benefits related to stock-based compensation.

The nine months ended September 30, 2022 also includes benefits for a first quarter Skyepharma milestone payment and a fair value adjustment for Flexion contingent consideration.

Liquidity and Capital Resources

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

As of June 30, 2022, we had an accumulated deficit of $138.0 million, cash and cash equivalents and short-term available-for-sale investments of $316.4 million and working capital of $393.0 million.

As of September 30, 2022, we had an accumulated deficit of $138.6 million, cash and cash equivalents and available-for-sale investments of $346.1 million and working capital of $401.9 million.

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

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

The CARES Act, among other things, allows for certain measures to increase liquidity for businesses

Pacira BioSciences, Inc.

| Q2 2022 Form 10-Q | Page 44

such as the deferral of employer payroll taxes, a tax credit for retaining employees and other provisions.

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

We benefited from the provision to defer the payment of certain employer payroll taxes in the amount of $2.8 million for the year ended December 31, 2020 and remitted $1.4 million in December 2021.

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

Pacira BioSciences, Inc.

| Q3 2022 Form 10-Q | Page 45

Summary of Cash Flows

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

Six Months Ended

Nine Months Ended

September 30,

Condensed Consolidated Statements of Cash Flows Data:

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Operating Activities

During the six months ended June 30, 2022, net cash provided by operating activities was $60.6 million, compared to $42.2 million during the six months ended June 30, 2021.

The increase of $18.4 million was primarily attributable to increased net product sales from both ZILRETTA, acquired as part of the Flexion Acquisition in November 2021, and EXPAREL, coupled with realized efficiencies from the acquisition of Flexion.

During the nine months ended September 30, 2022, net cash provided by operating activities was $103.2 million, compared to $102.5 million during the nine months ended September 30, 2021.

The increase of $0.7 million was attributable to increased net product sales from both ZILRETTA, acquired as part of the Flexion Acquisition in November 2021, and EXPAREL, offset by increases in all operating expense lines to support the existing and newly acquired products and product candidates, a slightly lower gross margin and increased interest payments.

Investing Activities

During the six months ended June 30, 2022, net cash used in investing activities was $188.9 million, which reflected $124.7 million of short-term available-for-sale investment purchases (net of maturities), a $32.0 million contingent consideration milestone payment that had been achieved in the fourth quarter of 2021 associated with our 2007 acquisition of Pacira Pharmaceuticals, Inc.

from Skyepharma, purchases of fixed assets of $19.4 million for fill lines for our products and equipment for a 200-liter EXPAREL capacity expansion project at our Science Center Campus in San Diego, California and purchases of equity and debt investments of $12.8 million.

During the six months ended June 30, 2021, net cash used in investing activities was $52.6 million, which reflected $23.8 million of short-term and long-term investment purchases (net of maturities) and purchases of fixed assets of $23.6 million.

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

In addition, we made a $10.0 million equity investment and also purchased a total of $4.2 million in convertible notes.

We also sold one of our equity investments for net cash proceeds of $9.1 million.

During the nine months ended September 30, 2022, net cash used in investing activities was $236.4 million, which reflected $166.8 million of available-for-sale investment purchases (net of maturities), a $32.0 million contingent consideration milestone payment that had been achieved in the fourth quarter of 2021 associated with our 2007 acquisition of Pacira Pharmaceuticals, Inc.

from Skyepharma, purchases of fixed assets of $24.6 million for fill lines for our products and equipment for an EXPAREL capacity expansion project at our Science Center Campus in San Diego, California and purchases of equity and debt investments of $13.0 million.

During the nine months ended September 30, 2021, net cash used in investing activities was $87.7 million, which reflected $42.9 million of short-term and noncurrent available-for-sale investment purchases (net of maturities) and purchases of fixed assets of $36.7 million.

Major fixed asset purchases included equipment for an EXPAREL capacity expansion project at our Science Center Campus in San Diego, California, and continuing expenditures for our expanding EXPAREL manufacturing capacity in Swindon, England in partnership with Thermo Fisher Scientific Services, Inc., or Thermo Fisher.

In addition, we made $13.0 million in equity investments, and also purchased a total of $4.2 million in convertible notes.

Further, we sold an equity investment for net cash proceeds of $9.1 million.

Financing Activities

During the six months ended June 30, 2022, net cash used in financing activities was $335.2 million, which primarily consisted of a $192.6 million principal repayment of the 3.375% convertible senior notes due 2024 (the “Flexion 2024 Notes”) as part of a repurchase offer to the holders of the Flexion 2024 Notes that was triggered by the Flexion Acquisition, $157.0 million to settle the 2022 Notes that matured on April 1, 2022 and a $9.4 million scheduled repayment of Term Loan principal, partially offset by $21.9 million of proceeds from the exercise of stock options and $1.8 million from the issuance of common stock through our ESPP.

During the six months ended June 30, 2021, net cash provided by financing activities was $16.2 million, which consisted of proceeds from the exercise of stock options of $16.0 million and $1.6 million from the issuance of common stock through our ESPP, partially offset by the $1.3 million financing component of the $7.0 million contingent consideration payment made to MyoScience securityholders.

During the nine months ended September 30, 2022, net cash used in financing activities was $343.0 million, which primarily consisted of a $192.6 million principal repayment of the 3.375% convertible senior notes due 2024 (the “Flexion 2024 Notes”) as part of a repurchase offer to the holders of the Flexion 2024 Notes that was triggered by the Flexion Acquisition, $157.0 million to settle the 2022 Notes that matured on April 1, 2022 and $18.8 million of scheduled repayments of Term Loan principal, partially offset by $23.5 million of proceeds from the exercise of stock options and $1.8 million from the issuance of common stock through our ESPP.

During the nine months ended September 30, 2021, net cash provided by financing activities was $19.3 million, which consisted of proceeds from the exercise of stock options of $19.0 million and $1.6 million from the issuance of common stock through our ESPP, partially offset by the $1.3 million financing component of a $7.0 million contingent consideration payment made to MyoScience securityholders.

Pacira BioSciences, Inc.

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

As of June 30, 2022, we were in compliance with all financial covenants under the Credit Agreement.

During the six months ended June 30, 2022, we made a scheduled principal payment of $9.4 million.

At June 30, 2022, we had $365.6 million in outstanding borrowings under the Term Loan.

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

As of September 30, 2022, we were in compliance with all financial covenants under the Credit Agreement.

During the nine months ended September 30, 2022, we made scheduled principal payments of $18.8 million.

At September 30, 2022, we had $356.3 million in outstanding borrowings under the Term Loan.

As a result of our entry into the Term Loan, our interest expense has increased in 2022.

See Note 9, Debt , to our condensed consolidated financial statements included herein for further discussion.

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The 2025 Notes mature on August 1, 2025.

At June 30, 2022, the outstanding principal on the 2025 Notes was $402.5 million.

At September 30, 2022, the outstanding principal on the 2025 Notes was $402.5 million.

See Note 9, Debt , to our condensed consolidated financial statements included herein for further discussion.

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

At June 30, 2022, the outstanding principal on the Flexion 2024 Notes was $8.6 million.

At September 30, 2022, the outstanding principal on the Flexion 2024 Notes was $8.6 million.

See Note 9, Debt , to our condensed consolidated financial statements included herein for further discussion.

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

• the cost and timing of the potential Flexion milestone payments under the CVR Agreement, which could be up to an aggregate of $425.5 million if certain regulatory and commercial milestones are met.

• the cost and timing of the potential Flexion milestone payments in connection with the Flexion Acquisition, which could be up to an aggregate of $425.5 million if certain regulatory and commercial milestones are met.

(See Note 4, Flexion Acquisition , to our condensed consolidated financial statements included herein for more information);

• the impact of the COVID-19 pandemic and global economic conditions, including the amounts and delays of suspended elective surgical procedures, clinical trials, longer lead-times for or the inability to secure a sufficient supply of materials;

• the impact of the COVID-19 pandemic and global economic conditions, including the amounts and delays of suspended elective surgical procedures, clinical trials, longer lead-times for, the inability to secure a sufficient supply of materials or the inflationary impact on the cost of materials;

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

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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-Q

Item 1. Financial Statements