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Item 9A. Controls and Procedures

2023-02-28 compared with 2022-02-28 · 590 added, 708 removed, 1248 unchanged (51% of the section changed)

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

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

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

Based on their evaluation as of December 31, 2022, our Chief Executive Officer and Chairman and Chief Financial Officer concluded that our disclosure controls and procedures were effective as of December 31, 2022.

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financial reporting of Pacira Therapeutics.

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

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

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

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Management’s Report on Internal Control over Financial Reporting

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Based upon the results of the evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2022.

The effectiveness of our internal control over financial reporting as of December 31, 2021 was audited by KPMG LLP, our independent registered public accounting firm, as stated in their report appearing below, which expressed an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2021.

The effectiveness of our internal control over financial reporting as of December 31, 2022 was audited by KPMG LLP, our independent registered public accounting firm, which expressed an unqualified opinion on the effectiveness of our internal control over financial reporting as of December 31, 2022.

Changes in Internal Control over Financial Reporting

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

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

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors

Pacira BioSciences, Inc.:

Opinion on Internal Control Over Financial Reporting

We have audited Pacira BioSciences, Inc.

and subsidiaries' (the Company) internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2021, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

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

The Company acquired Flexion Therapeutics, Inc.

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

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

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit of internal control over financial reporting included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and operating effectiveness of internal control based on the assessed risk.

Our audit also included performing such other procedures as we considered necessary in the circumstances.

We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles.

A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company;

(2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company;

and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

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

Short Hills, New Jersey

February 28, 2022

Pacira BioSciences, Inc.

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During the quarter ended December 31, 2022, our management integrated internal controls for the acquired Flexion business into our existing controls.

Other than the controls enhanced or implemented to integrate the Flexion business, there have been no changes in our internal control over financial reporting that occurred during the quarter ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Other Information

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

Securities Authorized For Issuance Under Equity Compensation Plans

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

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

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

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

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

Weighted Average Exercise Price of Outstanding

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

Equity compensation plans approved by stockholders (3)

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

Equity compensation plans not approved by stockholders (3)

30,030 $ 64.21 138,924

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

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

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

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

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

Information required by this item will be included in the proxy statement for our 2023 annual stockholders’ meeting and is incorporated by reference into this report.

Certain Relationships and Related Transactions, and Director Independence

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Exhibits, Financial Statement Schedules

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Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income (Loss)

Consolidated Statements of Comprehensive Income

Consolidated Statements of Stockholders’ Equity

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Notes to Consolidated Financial Statements

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

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

Report of Registered Independent Accounting Firm on the Consolidated Financial Statements

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

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

Their consent appears as Exhibit 23.1 of this Annual Report on Form 10-K.

Report of Independent Registered Public Accounting Firm

(2) Schedules

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

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

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

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EXHIBIT INDEX

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10-Q 4.1 5/2/2019

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

8-K 4.1 7/10/2020

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

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

8-K 4.1 7/10/2020

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

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

and Computershare Corporate Trust, National Association, as trustee (formerly Wells Fargo Bank, National Association).

10-K 4.4 2/28/2022

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

and Wells Fargo Bank, National Association, as trustee.

and Computershare Corporate Trust, National Association, as trustee (formerly Wells Fargo Bank, National Association).

10-K 4.5 2/28/2022

Description of Securities.

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

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

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

Form of Nonstatutory Stock Option Agreement (Employees) under the Amended and Restated 2011 Stock Incentive Plan for grants made on or after February 1, 2022.* *** 10-K 10.3 2/28/2022

Form of Nonstatutory Stock Option Agreement (Non-Employee Directors) under the Amended and Restated 2011 Stock Incentive Plan for grants made on or after February 1, 2022.* *** 10-K 10.4 2/28/2022

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

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

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

Amended and Restated 2014 Employee Stock Purchase Plan.*** 8-K 10.1 6/10/2022

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

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Incorporation By Reference From

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

Amendment No.

1 to Pacira BioSciences, Inc.

Deferred Compensation Plan.* ***

Pacira BioSciences, Inc.

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

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

and Patheon UK Limited, as amended to date.†† 10-K 10.36 2/28/22

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

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

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

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

and Patheon UK Limited, as amended to date.†† 10-K 10.37 2/28/22

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Incorporation By Reference From

Number Description Form Exhibit Date

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

and Patheon UK Limited, dated as of April 8, 2020.†† 10-K 10.38 2/28/22

Executive Employment Agreement, dated May 4, 2020, between the Registrant and Jonathan Slonin.*** 10-Q 10.1 5/4/2022

Subsidiaries of the Registrant.*

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

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Mark Kronenfeld

/s/ JOHN LONGENECKER Director February 28, 2022

John Longenecker

/s/ GARY PACE Director February 28, 2023

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PACIRA BIOSCIENCES, INC.

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Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020

Consolidated Statements of Comprehensive Income (Loss) for the years ended December 31, 2021, 2020 and 2019

Consolidated Statements of Comprehensive Income for the years ended December 31, 2022, 2021 and 2020

Consolidated Statements of Stockholders’ Equity for the years ended December 31, 2022, 2021 and 2020

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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

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Pacira BioSciences, Inc.:

Opinion on the Consolidated Financial Statements

Opinions on the Consolidated Financial Statements and Internal Control Over Financial Reporting

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

and subsidiaries (the Company) as of December 31, 2021 and 2020, the related consolidated statements of operations, comprehensive income (loss), stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2021, and the related notes (collectively, the consolidated financial statements).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2021 and 2020, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2021, in conformity with U.S.

and subsidiaries (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, stockholders’ equity, and cash flows for each of the years in the three-year period ended December 31, 2022, and the related notes (collectively, the consolidated financial statements).

We also have audited the Company’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the years in the three-year period ended December 31, 2022, in conformity with U.S.

generally accepted accounting principles.

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

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management.

Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S.

Also in our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022 based on criteria established in Internal Control – Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission

Basis for Opinions

The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Report on Internal Control Over Financial Reporting.

Our responsibility is to express an opinion on the Company’s consolidated financial statements and an opinion on the Company’s internal control over financial reporting based on our audits.

We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.

federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB.

Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained in all material respects.

Our audits of the consolidated financial statements included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks.

Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements.

Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.

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

Our audits also included performing such other procedures as we considered necessary in the circumstances.

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

Definition and Limitations of Internal Control Over Financial Reporting

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Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements.

Critical Audit Matters

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

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

Flexion Therapeutics, Inc.

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

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

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

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

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

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

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

Evaluation of the In-Process Research & Development Intangible Impairment Charge

As discussed in Notes 5 and 9 to the consolidated financial statements, the Company performs indefinite-lived intangible asset impairment testing on an annual basis and whenever events or changes in circumstances indicate the fair value of the indefinite-lived intangible asset has declined below its carrying amount.

Fair value is estimated using a discounted cash flow model.

The Company recorded an impairment charge of $26.1 million during 2022 related to in-process research & development (IPR&D) for ZILRETTA.

We identified the evaluation of the IPR&D intangible asset impairment charge as a critical audit matter.

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

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

Changes in these assumptions could have a significant impact on the fair value of this intangible asset.

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

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

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

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

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

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

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

and MyoScience, Inc.

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

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

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

The fair value of the Flexion and MyoScience, Inc.

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

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

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

We evaluated the design and tested the operating effectiveness of certain internal controls related to the Company’s process used to determine the fair value of its IPR&D intangible asset.

This included controls related to the development of assumptions for forecasted revenues and discount rate.

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

We involved valuation professionals with specialized skills and knowledge, who assisted in developing an independent estimate of the discount rate using inputs from publicly available market data and comparing the results to the Company's discount rate assumption.

Fair value measurement of the contingent consideration liability associated with the acquisition of Flexion

As discussed in Notes 5 and 12 to the consolidated financial statements, the Company recognized a contingent consideration liability at its estimated fair value on the acquisition date, in connection with the acquisition of Flexion Therapeutics, Inc.

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

The Company estimates the fair value using a probability-weighted discounted cash flow approach that is based on unobservable inputs and a Monte Carlo simulation.

The fair value of the Flexion contingent consideration as of December 31, 2022 was $28.1 million.

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

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

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

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

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

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

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

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

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

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

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

We involved valuation professionals with specialized skills and knowledge, who assisted in developing an independent estimate of the discount rates and volatility assumptions using inputs from publicly available market data and comparing the results to the Company’s discount rates and volatility assumptions.

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

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PACIRA BIOSCIENCES, INC.

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Total current assets 498,334 866,048

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

Noncurrent available-for-sale investments 37,209 —

Fixed assets, net 183,512 188,401

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Convertible senior notes, net — 350,466

Contingent consideration — 14,736

Current portion of long-term debt, net 33,648 24,234

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Convertible senior notes, net 404,767 339,267

Lease liabilities 71,727 71,025

Deferred revenue 10,125 —

Long-term debt, net 251,056 335,263

Lease liabilities 64,802 71,727

Contingent consideration 28,122 57,598

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Accumulated deficit ( 148,751 ) ( 211,895 )

Accumulated other comprehensive income 167 318

Accumulated other comprehensive (loss) income ( 380 ) 167

Total stockholders’ equity 775,010 730,408

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PACIRA BIOSCIENCES, INC.

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Amortization of acquired intangible assets 57,288 13,553 7,866

Acquisition-related charges, product discontinuation and other 42,911 5,166 25,230

Acquisition-related charges (gains), impairment and other 10,903 42,911 5,166

Total operating expenses 606,799 451,609 383,297

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Total other expense, net ( 46,722 ) ( 33,520 ) ( 26,261 )

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

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

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

Net income (loss) per share:

Basic net income (loss) per common share $ 0.95 $ 3.41 $ ( 0.27 )

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

Income before income taxes 13,302 56,404 20,089

Income tax benefit (expense) 2,607 ( 14,424 ) 125,434

Net income $ 15,909 $ 41,980 $ 145,523

Net income per share:

Basic net income per common share $ 0.35 $ 0.95 $ 3.41

Diluted net income per common share $ 0.34 $ 0.92 $ 3.33

Weighted average common shares outstanding:

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PACIRA BIOSCIENCES, INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

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2022 2021 2020

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

Other comprehensive income (loss):

Net unrealized gain (loss) on investments, net of tax ( 180 ) ( 3 ) 602

Net income $ 15,909 $ 41,980 $ 145,523

Other comprehensive (loss) income:

Net unrealized loss on investments, net of tax ( 662 ) ( 180 ) ( 3 )

Foreign currency translation adjustments 115 29 ( 1 )

Total other comprehensive income (loss) ( 151 ) ( 4 ) 602

Comprehensive income (loss) $ 41,829 $ 145,519 $ ( 10,414 )

Total other comprehensive loss ( 547 ) ( 151 ) ( 4 )

Comprehensive income $ 15,362 $ 41,829 $ 145,519

See accompanying notes to consolidated financial statements

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

Cumulative effect adjustment of the adoption

of Accounting Standards Update 2016-02

(Note 3) — — — ( 156 ) — ( 156 )

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

Vested restricted stock units 239 — — — — —

Common stock issued under employee stock

purchase plan 67 — 2,402 — — 2,402

Common stock issued under employee stock purchase plan 62 — 2,546 — — 2,546

Stock-based compensation — — 39,920 — — 39,920

Retirement of equity component

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

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

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

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

Equity component of 2025 convertible senior notes issued, net of deferred taxes of $ 20,450 (Note 11)

— — 64,619 — — 64,619

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

Net income — — — 145,523 — 145,523

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

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Vested restricted stock units 310 — — — — —

Common stock issued under employee stock

purchase plan 62 — 2,546 — — 2,546

Common stock issued under employee stock purchase plan 55 — 2,811 — — 2,811

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

Retirement of equity component

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

Equity component of 2025 convertible

senior notes issued, net of deferred taxes

of $ 20,450 (Note 11)

— — 64,619 — — 64,619

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

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

Reclassification of the equity component of convertible senior notes to liabilities upon adoption of Accounting Standards Update 2020-06 (Note 3) — — ( 96,468 ) 47,235 — ( 49,233 )

Exercise of stock options 690 1 24,386 — — 24,387

Vested restricted stock units 331 — — — — —

Common stock issued under employee stock

purchase plan 55 — 2,811 — — 2,811

Common stock issued under employee stock purchase plan 71 — 2,954 — — 2,954

Stock-based compensation — — 48,092 — — 48,092

Issuance of common stock upon conversion of 2022 convertible senior notes (Note 11) 102 — 3,040 — — 3,040

Other comprehensive loss (Note 13) — — — — ( 547 ) ( 547 )

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PACIRA BIOSCIENCES, INC.

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Operating activities:

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

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

Net income $ 15,909 $ 41,980 $ 145,523

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

Deferred taxes ( 7,945 ) 10,872 ( 126,613 )

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Amortization of debt discount 2,807 23,152 18,254

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

Loss (gain) on disposal of fixed assets 193 ( 10 ) 22

Loss on early extinguishment of debt — — 8,071

Stock-based compensation 48,092 42,246 39,920

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

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

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

Changes in contingent consideration ( 29,476 ) ( 989 ) 5,204

Impairment of indefinite-lived intangible asset 26,134 — —

Impairment of investment 10,000 — —

Loss (gain) on investment and other non-operating income, net 92 2,673 ( 1,618 )

Changes in operating assets and liabilities:

Accounts receivable, net ( 2,079 ) ( 10,434 ) ( 5,516 )

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

Deferred revenue 125 — —

Net cash provided by operating activities 145,274 125,717 77,032

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

Acquisition of MyoScience, Inc.

(net of cash acquired) — — ( 117,691 )

Purchases of fixed assets ( 30,076 ) ( 45,866 ) ( 37,801 )

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Proceeds from common stock issued under employee stock purchase plan 2,954 2,811 2,546

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

Proceeds from Term loan B facility maturing December 2026 — 363,750 —

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

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Repayment of 2022 convertible senior notes ( 156,960 ) — ( 176,793 )

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

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

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

Repayment of 2024 convertible senior notes ( 192,609 ) — —

Repayment of Term loan B facility maturing December 2026 ( 78,125 ) — —

Payment of debt issuance and financing costs ( 1,175 ) ( 4,546 ) ( 12,487 )

Payment of contingent consideration — ( 5,165 ) ( 5,591 )

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

Net increase (decrease) in cash and cash equivalents 485,621 21,729 ( 54,298 )

Net cash (used) provided by financing activities ( 401,528 ) 380,694 222,304

Net (decrease) increase in cash and cash equivalents ( 481,439 ) 485,621 21,729

Cash and cash equivalents, beginning of year 585,578 99,957 78,228

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PACIRA BIOSCIENCES, INC.

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Non-cash investing and financing activities:

Issuance of common stock from conversion of 2022 convertible senior notes $ 3,040 $ — $ —

Fixed assets included in accounts payable and accrued liabilities $ 5,888 $ 6,828 $ 9,288

Net increase in contingent consideration liabilities $ 45,241 $ — $ 28,470

Net additions to contingent consideration liabilities $ — $ 45,241 $ —

See accompanying notes to consolidated financial statements.

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and its subsidiaries (collectively, the “Company” or “Pacira”) is the industry leader in its commitment to non-opioid pain management and providing a non-opioid option to as many patients as possible to redefine the role of opioids as rescue therapy only.

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

The Company is also developing innovative interventions to address debilitating conditions involving the sympathetic nervous system, such as cardiac electrical storm, chronic pain and spasticity.

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

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

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

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

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

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

For more information, see Note 5, Acquisitions .

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

Coronavirus (COVID-19) Pandemic

Since early 2020, the Company’s revenues have been impacted by the global pandemic caused by a novel strain of coronavirus (COVID-19) and pandemic-related challenges that included the significant postponement or suspension in the scheduling of elective surgical procedures due to public health guidance and government directives.

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

For more information, see Note 5, Flexion Acquisition .

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

The iovera° system is a handheld cryoanalgesia device used to deliver a precise, controlled application of cold temperature to 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 single source suppliers, protection of proprietary technology, compliance with government regulations and risks related to cybersecurity.

Coronavirus (COVID-19) Pandemic and Global Economic Conditions

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

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

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

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

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

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

Direct and indirect effects of the pandemic and global economic conditions have and may continue to negatively impact the Company’s business, financial condition and results of operations.

Such impacts may include the effect of prolonged periods of inflation and rising interest rates on the Company’s customers and suppliers and longer lead-times or the inability to secure a sufficient supply of materials.

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

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

Additional negative impacts may also arise that the Company is unable to foresee.

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

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All intercompany balances and transactions have been eliminated in consolidation.

Certain reclassifications were made to conform to the current presentation.

Certain reclassifications from previously issued financial statements have been made to conform to the current presentation.

Use of Estimates

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

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

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

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

Because of the uncertainty of factors surrounding the

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

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

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

Revenue From Contracts With Customers

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

and the United Kingdom, or U.K.;

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

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

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

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

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

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

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

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

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

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

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

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The Company sells EXPAREL through a drop-ship program under which orders are processed through wholesalers (including AmerisourceBergen Health Corporation, Cardinal Health, Inc.

and McKesson Drug Company), but shipments of the product are sent directly to individual accounts, such as hospitals, ambulatory surgery centers and individual doctors.

and McKesson Drug Company), but shipments of the product are sent directly to individual accounts, such as hospitals, ambulatory surgery centers and individual physicians.

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

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Total 76 % 85 % 87 %

The year ended December 31, 2022 included the first full-year of ZILRETTA net product sales.

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

Pacira BioSciences, Inc.

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Revenue from outside the U.S.

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

accounted for less than 1 % of the Company’s total revenue for the years ended December 31, 2022 and 2021.

The Company began selling EXPAREL in the E.U.

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

during the years ended December 31, 2020 and 2019.

during the year ended December 31, 2020.

Research and Development Expenses

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

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

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

Stock-Based Compensation

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

In calculating the estimated fair value of stock options granted, the Company uses the Black-Scholes option valuation model, or Black-Scholes model, which requires the consideration of the following variables for purposes of estimating fair value in addition to the closing price of the Company’s common stock on the date of grant:

In calculating the estimated fair value of stock options and employee stock purchase plan share options granted, the Company uses the Black-Scholes option valuation model, or Black-Scholes model, which requires the consideration of the following variables for purposes of estimating fair value in addition to the closing price of the Company’s common stock on the date of grant:

• Expected term of the option

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

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

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

Cash and Cash Equivalents

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

As of December 31, 2022, the carrying value of money market funds was $ 42.6 million.

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

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

The carrying values approximate fair value as of December 31, 2022 and 2021.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

Short-Term and Noncurrent Available-For-Sale Investments

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

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

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

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

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

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

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

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

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

The Company periodically reviews these useful lives relative to physical factors, economic factors and industry trends.

If there are changes in the planned use of property or equipment, the useful lives assigned to these assets may need to be shortened, resulting in the recognition of accelerated depreciation expense in future periods.

Leasehold improvements are amortized on a straight-line basis over the shorter of their estimated useful lives or the related remaining lease terms.

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

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

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

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

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The Company does not have any financing leases.

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

Variable lease payments are not included at commencement and are recognized in the period in which they are incurred.

The lease term is based on the contractual term and is adjusted for any renewal options or termination rights that are reasonably certain to be exercised.

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

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

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

incremental borrowing rate.

Variable lease payments are not included at commencement and are recognized in the period in which they are incurred.

The Company has elected to net the amortization of its ROU assets and the reduction of the lease liability principal in other liabilities in the consolidated statement of cash flows.

The lease term is based on the contractual term and is adjusted for any renewal options or termination rights that are reasonably certain to be exercised.

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

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

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Transaction costs and costs to restructure the acquired company are expensed as incurred.

The operating results of the acquired business are reflected in the Company’s consolidated financial statements after the date of the acquisition.

The operating results of the acquired business are reflected in the Company’s consolidated financial statements after the closing date of the acquisition.

Contingent Consideration

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

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

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

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

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

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

Intangible Assets

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

Indefinite-lived intangible assets are tested for impairment at least annually or when a triggering event occurs that could indicate a potential impairment exists.

Impairment charges are recognized to the extent the carrying value exceeds its fair value.

Equity Investments

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

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

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

Impairment of Long-Lived Assets

Management reviews long-lived assets, including fixed assets and intangible assets, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset.

If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Convertible Debt Transactions

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

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

The difference between the initial proceeds

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

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

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

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

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

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

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

Impairments of Long-Lived Assets

Management reviews long-lived assets, including fixed assets and finite-lived intangible assets, for impairment whenever events or changes in circumstances indicate the carrying amount of an asset may not be recoverable.

Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to the future undiscounted net cash flows expected to be generated by the asset.

If such assets are considered to be impaired, the impairment to be recognized is measured as the amount by which the carrying amount of the assets exceeds the fair value of the assets.

Per Share Data

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

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

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

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

Under the if-converted method, adjustments are made to the diluted net income (loss) per common share calculation as if the Company had converted the convertible senior notes on the first day of each period presented.

Adjustments to the numerator are made to add back the interest expense associated with the convertible senior notes on a post-tax basis.

Foreign Currencies

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

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

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

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

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

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

1 unchanged sentence

The Company is managed and operated as a single business focused on the development, manufacture, marketing, distribution and sale of non-opioid pain management and regenerative health solutions.

The Company is managed by a single management team, and, consistent with its organizational structure, the Chief Executive Officer manages and allocates resources at a consolidated level.

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

The Company is managed by a single management team, and, consistent with its organizational structure, the Chief Executive Officer—who is the Company’s chief operating decision maker—manages and allocates resources at a consolidated level.

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

NOTE 3— RECENT ACCOUNTING PRONOUNCEMENTS

Recently Adopted Accounting Pronouncements

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

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

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

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

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

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

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

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

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

As a result, effective January 1, 2022, the Company does not separately present in equity an embedded conversion feature for its convertible debt.

Instead, the Company accounts for its convertible debt instruments wholly as debt.

In addition, effective January 1, 2022, the Company does not record interest expense on the previously recorded discount on its convertible debt.

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

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

on or after the date of initial application.

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

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

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

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

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

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

Recent Accounting Pronouncements Not Adopted as of December 31, 2021

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

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

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

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

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

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

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

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

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

NOTE 4— REVENUE

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

(ii) ZILRETTA in the U.S.;

(iii) iovera° in the U.S.

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

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

The Company’s sources of revenue are detailed in Note 2, Summary of Significant Accounting Policies .

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

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

As such, the following disclosure is limited to revenue associated with net product sales of EXPAREL and ZILRETTA.

Net Product Sales

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

The Company includes these estimated amounts in the transaction price to the extent it is probable that a

The Company includes these estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for such transaction will not occur, or when the uncertainty associated with the variable consideration is resolved.

Chargebacks for fees and discounts to qualified government healthcare providers represent the estimated obligations resulting from contractual commitments to sell products to qualified Department of Veteran Affairs hospitals and 340B entities at prices lower than the list prices charged to other customers.

The 340B Drug Discount Program is a U.S.

federal government program created in 1992 that requires participating drug manufacturers to provide outpatient drugs to eligible health care organizations and covered entities at reduced prices.

Customers charge the Company for the difference between the product payment and the statutory selling price to the qualified entity.

Reserves are established in the same period that the related revenue is recognized, resulting in a reduction of product revenue and trade receivables, net.

Chargeback amounts are generally determined at the time of sale to the qualified government healthcare provider by customers, and the Company generally issues credits for such amounts within weeks of the customer’s notification to the Company of the sale.

Reserves for chargebacks consist of credits that the Company expects to issue for units that the Company expects will be sold to qualified healthcare providers, and chargebacks that customers have claimed, but for which the Company has not yet issued a credit.

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

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

The following table provides a summary of activity with respect to the Company’s sales related allowances and accruals related to EXPAREL for the years ended December 31, 2022, 2021 and 2020, as well as ZILRETTA for the years ended December 31, 2022 and 2021 (in thousands):

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

significant reversal of cumulative revenue recognized for such transaction will not occur, or when the uncertainty associated with the variable consideration is resolved.

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

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

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

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

Returns Allowances Prompt Payment Discounts Service

Fees Volume Rebates and Chargebacks Government Rebates Total

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

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Collaborative Licensing and Milestone Revenue

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

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

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

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

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

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

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

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

The Company’s collaborative licensing and milestone revenue recognition policy is discussed in Note 2, Summary of Significant Accounting Policies

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, a specialty pharmacy and individual physicians.

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

Performance Obligations

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

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

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

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-17

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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Total net product sales $ 664,150 $ 538,966 $ 426,614

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

NOTE 5— ACQUISITIONS

Pacira BioSciences, Inc.

| 2022 Form 10-K | Page F-18

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

NOTE 5— FLEXION ACQUISITION

Flexion Therapeutics, Inc.

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

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

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

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

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

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

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

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

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

The Company estimates that up to an additional $ 380.2 million in the aggregate may be payable to holders of the CVRs if each of the applicable milestones are achieved, as follows:

At the time of the acquisition, the Company estimated that up to an additional $ 380.2 million in the aggregate may be payable to holders of the CVRs if each of the applicable milestones are achieved by December 31, 2030, as follows:

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

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

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

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-18

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

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

In September 2022, based on the results of a completed phase 1 study, the Company decided to discontinue further development of PCRX-301.

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

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

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

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

Cash paid to settle Flexion debt 85,118

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

Fair value of CVRs 45,241

Total purchase consideration $ 578,845

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

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

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

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

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

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

The final allocation of the consideration transferred to the assets acquired and the liabilities assumed has been completed.

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

Amounts Recognized at the Acquisition Date

(as previously

reported) (a)

Measurement Period Adjustments (b)

Amounts Recognized at the Acquisition Date

(as adjusted)

ASSETS ACQUIRED

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Identifiable intangible assets 480,000 — 480,000

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

IPR&D 61,000 — 61,000

Total assets $ 820,979 $ ( 16,906 ) $ 804,073

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Total consideration transferred $ 578,845 $ — $ 578,845

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

(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.

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

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

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

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

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

Classification in Consolidated Statements of Operations Acquisition Date Through

December 31, 2021

Total revenues $ 12,683

Net loss $ ( 25,010 )

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

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

Refer to Note 9, Goodwill and Intangible Assets , and Note 18, Acquisition-related Charges (Gains), Impairment and Other, for further information related to the Flexion Acquisition.

Pacira BioSciences, Inc.

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

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

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

• Recognition of the income tax benefit resulting from decreasing Flexion’s existing valuation allowance on deferred tax assets for the year ended December 31, 2021;

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

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

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

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

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

• Additional depreciation of fixed assets;

• Additional lease expense on the ROU assets.

• Additional depreciation of Flexion’s fixed assets;

• Additional lease expense on Flexion’s ROU assets.

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

MyoScience, Inc.

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

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

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

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

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

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

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

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-21

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 6— INVENTORIES

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Total $ 96,063 $ 98,550

Pacira BioSciences, Inc.

| 2022 Form 10-K | Page F-21

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7— FIXED ASSETS

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Construction in progress (1)

103,226 80,557

Total 300,992 273,641

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Fixed assets, net $ 183,512 $ 188,401

(1) The increase of $ 22.7 million in construction in progress is related to progress in the expansion of the Company’s manufacturing facilities, including an EXPAREL capacity expansion project at the Company’s Science Center Campus in San Diego, California and a ZILRETTA capital project at Thermo Fisher Scientific Pharma Services’s site in Swindon, England.

For information on useful lives by asset category, refer to Note 2, Summary of Significant Accounting Policies.

Depreciation expense for the years ended December 31, 2022, 2021 and 2020 was $ 34.2 million, $ 15.0 million and $ 12.0 million, respectively.

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

During the years ended December 31, 2022, 2021 and 2020, the Company capitalized interest of $ 4.1 million, $ 3.9 million and $ 2.4 million, respectively.

In 2022, the Company accelerated $ 10.5 million of depreciation expense for certain machinery and equipment for which no future economic benefit was identified.

As of December 31, 2022 and 2021, total fixed assets, net, includes leasehold improvements and manufacturing process equipment located outside of the U.S.

in the amount of $ 44.7 million and $ 65.4 million, respectively.

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

NOTE 8— LEASES

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

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

The Company also has an embedded lease with Thermo Fisher Scientific Pharma Services for the use of their manufacturing facility in Swindon, England.

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

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

As of December 31, 2022 and 2021, the Company had AROs of $ 3.3 million and $ 2.4 million, respectively, included in accrued expenses and other liabilities on its consolidated balance sheet, for costs associated with returning leased space to its original condition upon the termination of certain of its lease agreements.

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 8— LEASES

The Company leases all of its facilities, including its EXPAREL and iovera° handpiece manufacturing facility at its Science Center Campus in San Diego, California.

The Company also has an embedded lease with Thermo Fisher Scientific Pharma Services for the use of their manufacturing facility in Swindon, England.

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

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.

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Variable lease costs 1,988 1,722 2,096

Sublease income ( 253 ) — —

Total $ 15,684 $ 13,698 $ 12,151

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2022 2021 2020

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

Cash paid for operating lease liabilities, net of lease incentives $ 14,357 $ 12,709 $ 14,347

Right-of-use assets recorded in exchange for lease obligations $ 3,324 $ 8,692 $ 42,191

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

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

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

The weighted average remaining lease terms and the weighted average discount rates are summarized as follows:

Weighted average remaining lease term 6.83 years 7.77 years

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As of December 31, 2022, maturities of the Company’s operating lease liabilities are as follows (in thousands):

Year Aggregate Payments Due

Year Aggregate Minimum Payments Due

2023 $ 14,022

2027 and thereafter 39,423

Total lease payments 104,165

Thereafter 27,350

Total future lease payments 93,778

imputed interest ( 19,855 )

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Balance at December 31, 2020 $ 99,547

2020 accumulated adjustments —

Balance at December 31, 2020 99,547

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

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Balance at December 31, 2021 145,175

Goodwill arising from measurement period adjustments associated with the Flexion Acquisition (Note 5) 18,068

Balance at December 31, 2022 $ 163,243

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

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

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

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

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

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

Upon the Flexion Acquisition, the Company recorded goodwill totaling $ 9.6 million.

Within one year from the Flexion Acquisition date, measurement period adjustments of $ 18.1 million were recorded to goodwill as the facts and circumstances existed prior to the acquisition date.

The adjustments primarily represent the finalization of a tax study and pre-acquisition expenses.

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

Intangible Assets

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

December 31, 2021 Gross Carrying Value Accumulated

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

December 31, 2022 Gross

Carrying Value Accumulated

Amortization Intangible

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Total intangible assets, net $ 624,956 $ ( 84,410 ) $ 540,546

December 31, 2020 Gross Carrying Value Accumulated

December 31, 2021 Gross

Carrying Value Accumulated

Amortization Intangible

Assets, Net Weighted-Average

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

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

Customer relationships 90 ( 25 ) 65 10 years

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

Acquired IPR&D 61,000 — 61,000

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

Amortization expense on intangible assets for the years ended December 31, 2022 and 2021 was $ 57.3 million and $ 13.6 million, respectively.

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

The increase in expense in 2022 is the result of a full year of amortization associated with ZILRETTA for OA knee pain acquired as part of the Flexion Acquisition in November 2021.

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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 $ 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 indefinite-lived intangible assets for impairment annually and whenever an event or change in circumstances arises that indicates the carrying amount of an indefinite-lived intangible asset is at risk of not being recoverable.

During the year ended December 31, 2022, the annual impairment assessment for ZILRETTA acquired IPR&D for the treatment of OA pain of the shoulder was conducted through a recoverability test at December 31, 2022 by comparing the $ 60.0 million carrying value of the asset against the fair value through a discounted cash flow model of $ 33.9 million based on new facts and circumstances.

The change in fair value was primarily driven by later timelines for the completion of clinical trials impacting revenue forecasts, among other factors.

An impairment of $ 26.1 million was recognized within acquisition-related charges (gains), impairment and other in the consolidated statements of operations for the year ended December 31, 2022 based on the amount its previous carrying value exceeded its updated fair value.

NOTE 10— ACCRUED EXPENSES

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Compensation and benefits (1)

26,198 45,491

Termination fee (2)

Accrued royalties (3)

2 unchanged sentences

Total $ 89,785 $ 127,555

(1) At December 31, 2021, compensation and benefits included $ 18.4 million of accrued severance associated with the Flexion Acquisition.

(2) See Note 20, Commitments and Contingencies , for more information.

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

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

This milestone was paid in the first quarter of 2022.

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

5 unchanged sentences

3.375 % Convertible senior notes due May 2024

2.375 % Convertible senior notes due April 2022

8,641 201,249

2.375 % Convertible senior notes due April 2022 (1)

Total $ 689,471 $ 1,049,230

(1) The 2022 Notes (as defined below) matured on April 1, 2022.

Pacira BioSciences, Inc.

| 2022 Form 10-K | Page F-25

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Term Loan B Facility

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

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

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

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

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

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

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

4 unchanged sentences

Total debt, net of debt discount and deferred financing costs $ 284,704 $ 359,497

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

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

During 2022, the Company will be required to make three

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-25

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

quarterly payments totaling $ 28.1 million.

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

No mandatory prepayments are due for 2021.

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

The Term Loan matures on December 7, 2026 and requires quarterly repayments of principal in the amount of $ 9.4 million commencing June 30, 2022, and increasing to $ 14.1 million commencing December 31, 2025, with a remaining balloon payment of approximately $ 137.5 million due at maturity.

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

Prepayment penalties for the Term Loan were 2 % in the first loan year plus an interest make-whole payment, 2 % in the second loan year, 1 % in the third loan year and nothing thereafter.

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

During the year ended December 31, 2022, the Company made scheduled principal payments of $ 28.1 million in the aggregate.

In addition, during the year ended December 31, 2022, the Company made an additional prepayment of $ 51.0 million, which included a $ 50.0 million reduction in principal and a $ 1.0 million prepayment penalty recorded as part of its deferred financing costs to be included in interest expense prospectively.

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.

3 unchanged sentences

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

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

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 December 31, 2022, borrowings under the Term Loan consisted entirely of term benchmark borrowings at a rate of 10.78 %.

Convertible Senior Notes Due 2025

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

(formerly Wells Fargo Bank, N.A.), or 2025 Indenture, with respect to the 2025 Notes.

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

The 2025 Notes mature on August 1, 2025.

Pacira BioSciences, Inc.

| 2022 Form 10-K | Page F-26

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

4 unchanged sentences

Total debt, net of debt discount and deferred financing costs $ 396,126 $ 330,627

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

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

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

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

The Company’s transaction costs of approximately $ 12.5 million related to the issuance of the 2025 Notes are amortized to interest expense over the five-year term of the 2025 Notes.

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

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

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-26

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

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

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

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

The conditions for conversion were not met during the calendar quarter ended December 31, 2022.

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

None of these conditions for conversion were met during the quarter ended December 31, 2021.

Upon conversion, holders will receive the principal amount of their 2025 Notes and any excess conversion value, calculated based on the per share volume-weighted average price for each of the 40 consecutive trading days during the observation period (as more fully described in the 2025 Indenture).

9 unchanged sentences

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

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

Pacira BioSciences, Inc.

| 2022 Form 10-K | Page F-27

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

redemption date.

In addition, calling the 2025 Notes for redemption will constitute a “make-whole fundamental change” (as defined in the 2025 Indenture) and will, in certain circumstances, increase the conversion rate applicable to the conversion of such notes if it is converted in connection with the redemption.

4 unchanged sentences

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

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-27

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

The liability component of the instrument is valued in a manner that reflects the market interest rate for a similar nonconvertible instrument at the date of issuance.

Prior to January 1, 2022, under the previous ASC 470-20, Debt with Conversion and Other Options , an entity used to separately account for the liability and equity components of convertible debt instruments that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost.

The liability component of the instrument used to be valued in a manner that reflected the market interest rate for a similar nonconvertible instrument at the date of issuance.

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

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

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

The equity component is not re-measured as long as it continues to meet the conditions for equity classification.

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

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

The Company allocated the total transaction costs of approximately $ 12.5 million related to the issuance of the 2025 Notes to the liability and equity components of the 2025 Notes based on their relative values.

Transaction costs attributable to the liability component are amortized to interest expense over the five-year term of the 2025 Notes, and transaction costs attributable to the equity component totaling $ 2.7 million are netted with the equity component in stockholders’ equity.

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

The equity component used to be treated as a discount on the liability component of the 2025 Notes, which was amortized over the five-year term of the 2025 Notes using the effective interest rate method.

Resulting from ASU 2020-06, ASC 470-20 was revised effective January 1, 2022 which eliminated the requirement to separately account for the embedded conversion features that are not clearly and closely related to the debt, that meet the definition of a derivative and that do not qualify for the scope exception from derivative accounting and convertible debt instruments issued with substantial premiums for which the premiums were recorded as paid in capital.

Effective January 1, 2022, the 2025 Notes debt discount carrying value of $ 64.7 million was eliminated and there was a $ 1.7 million increase in deferred financing costs offset by additional paid-in capital, accumulated deficit and deferred tax assets.

For additional information regarding the adoption of ASU 2020-06, see Note 3 , Summary of Significant Accounting Policies .

The 2025 Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by the Company.

1 unchanged sentence

Convertible Senior Notes Due 2024 Assumed from the Flexion Acquisition

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

Prior to the Flexion Acquisition, in May 2017, Flexion issued an aggregate of $ 201.3 million principal amount of 3.375 % convertible senior notes due 2024 (the “Flexion 2024 Notes”), pursuant to the indenture, dated as of May 2, 2017 (the “Original Flexion Indenture”), between Flexion and Computershare Corporate Trust, N.A.

(formerly Wells Fargo Bank, N.A.), as trustee (the “Flexion Trustee”), as supplemented by the First Supplemental Indenture, dated as of November 19, 2021, between Flexion and the Flexion Trustee (the “First Supplemental Flexion Indenture” and, together with the Original Flexion Indenture, the “Flexion Indenture”).

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

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

Pacira BioSciences, Inc.

| 2022 Form 10-K | Page F-28

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

3 unchanged sentences

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

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-28

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

3 unchanged sentences

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

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

At December 31, 2022, the remaining principal outstanding was $ 8.6 million.

Convertible Senior Notes Due 2022

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

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

The 2022 Notes mature on April 1, 2022.

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

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

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

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

5 unchanged sentences

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

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

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

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

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

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

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

As of December 31, 2021, the 2022 Notes had a market price of $1,039 per $1,000 principal amount.

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

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

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

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

On April 1, 2022, the 2022 Notes matured and the Company settled the remaining outstanding principal balance of $ 160.0 million and a conversion premium of $ 4.8 million through a cash payment of $ 156.9 million and the issuance of 101,521 shares of the Company’s common stock, which increased additional paid-in capital by $ 3.0 million.

Pacira BioSciences, Inc.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

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

In addition, calling the 2022 Notes for redemption will constitute a “make-whole fundamental change” (as defined in the 2022 Indenture) and will, in certain circumstances, increase the conversion rate applicable to the conversion of such notes if it is converted in connection with the redemption.

No sinking fund is provided for the 2022 Notes.

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

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

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

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

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

The liability component of the instrument is valued in a manner that reflects the market interest rate for a similar nonconvertible instrument at the date of issuance.

The initial carrying value of the liability component of $ 274.1 million was calculated using a 7.45 % assumed borrowing rate.

The equity component of $ 70.9 million, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the 2022 Notes and was recorded in additional paid-in capital on the consolidated balance sheet at the issuance date.

That equity component is treated as a discount on the liability component of the 2022 Notes, which is amortized over the five-year term of the 2022 Notes using the effective interest rate method.

The equity component is not re-measured as long as it continues to meet the conditions for equity classification.

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

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

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

The 2022 Indenture contains customary events of default with respect to the 2022 Notes, including that upon certain events of default, 100 % of the principal and accrued and unpaid interest on the 2022 Notes will automatically become due and payable.

Interest Expense

5 unchanged sentences

Amortization of debt discount 2,807 23,152 18,254

Capitalized interest (Note 7) ( 3,915 ) ( 2,389 ) ( 20 )

Capitalized interest and other (Note 7)

( 4,111 ) ( 3,915 ) ( 2,389 )

Total $ 39,976 $ 31,750 $ 25,671

Effective interest rate on total debt 5.47 % 6.66 % 7.15 %

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-30

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Upon the adoption of ASU 2020-06 effective January 1, 2022, the Company eliminated the convertible debt discounts associated with the 2022 Notes and the 2025 Notes that were originally recorded as offsets to the embedded conversion features recognized in equity.

Effective January 1, 2022, the Company does not record interest expense on previously recorded discounts on convertible debt attributable to the convertible feature.

The deferred financing costs previously allocated to the conversion features have been re-allocated to the outstanding debt.

For additional information regarding the adoption of ASU 2020-06, see Note 3 , Summary of Significant Accounting Policies .

NOTE 12— FINANCIAL INSTRUMENTS

9 unchanged sentences

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

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

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

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

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

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

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 year ended December 31, 2022.

Pacira BioSciences, Inc.

| 2022 Form 10-K | Page F-30

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

At December 31, 2022, the carrying values and fair values of the Company’s financial assets and liabilities were as follows (in thousands):

Value Fair Value Measurements Using

7 unchanged sentences

Financial Liabilities Measured at Amortized Cost:

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

2.375% convertible senior notes due 2022 (1)

$ 157,857 $ — $ 166,200 $ —

Term loan B facility due December 2026 $ 284,704 $ — $ 292,422 $ —

0.750 % convertible senior notes due 2025 (1)

2 unchanged sentences

$ 8,641 $ — $ 8,641 $ —

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

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

The maximum conversion premium that could have been due on the 2022 Notes and 2025 Notes at December 31, 2021 was approximately 2.4 million and 5.6 million shares of the Company’s common stock, respectively.

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

(1) The closing price of the Company’s common stock as reported on the Nasdaq Global Select Market was $ 38.61 per share at December 31, 2022 compared to a conversion price of $ 71.78 per share.

At December 31, 2022, as the conversion price was above the stock price, the requirements for conversion have not been met.

The maximum conversion premium that could have been due on the 2025 Notes at December 31, 2022 is approximately 5.6 million shares of the Company’s common stock, which assumes no increase in the conversion rate for certain events.

(2) Relates to the Flexion 2024 Notes.

2 unchanged sentences

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

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

Equity and Convertible Note Investments

The Company holds strategic investments in clinical and preclinical stage privately-held biotechnology companies in the form of equity and convertible note investments.

The following investments have no readily determinable fair value and are recorded at cost minus impairment, if any, plus or minus observable price changes of identical or similar investments (in thousands):

Equity Investments Convertible Notes Receivable Total

Balance at December 31, 2020

$ 12,802 $ — $ 12,802

Purchases 12,967 4,220 17,187

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

Foreign currency adjustments — ( 88 ) ( 88 )

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 — ( 67 ) ( 67 )

Balance at December 31, 2022

$ 15,877 $ 5,315 $ 21,192

During the year ended December 31, 2022, an impairment of an equity investment of $ 10.0 million was recorded in other, net in the consolidated statements of operations.

Pacira BioSciences, Inc.

2 unchanged sentences

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Financial Liabilities Measured at Fair Value on a Recurring Basis

During the year ended December 31, 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 consolidated statements of operations.

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

In February 2023, the Company invested $ 4.0 million in a convertible note receivable.

Acquisition-Related Contingent Consideration

The Company has recognized contingent consideration related to the Flexion Acquisition and the MyoScience Acquisition in the amount of $ 28.1 million and $ 57.6 million as of December 31, 2022 and 2021, respectively.

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

Refer to Note 5, Flexion Acquisition and Note 18, Acquisition-related Charges (Gains), Impairment and Other, for more information.

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

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

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

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

Significant changes may increase or decrease the probabilities of achieving the related commercial and regulatory events, shorten or lengthen the time required to achieve such events, or increase or decrease estimated forecasts.

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

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

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

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

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

In November 2021, the Company completed the Flexion Acquisition, which provided for contingent consideration related to CVRs that were issued to Flexion shareholders and certain equity award holders which could aggregate up to a total of $ 372.3 million if certain regulatory and commercial milestones are met.

The aggregate amount was previously $ 425.5 million prior to the Company’s September 2022 decision to formally discontinue further development of PCRX-301.

The Company’s obligation to make milestone payments is limited to those milestones achieved through December 31, 2030, and are to be paid within 60 days of the end of the fiscal quarter of achievement.

As part of the purchase price consideration related to the Flexion Acquisition, the Company recorded contingent consideration of $ 45.2 million, which represented the Company’s potential achievement of meeting the regulatory and commercial milestones.

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

For the year ended December 31, 2022 , the Company recorded a gain of $ 18.3 million primarily due to adjustments to near-term forecasts for the earnout period of the Flexion contingent consideration, which were recorded as acquisition-related gains in the consolidated statements of operations.

At December 31, 2022, the weighted average discount rate was 15.0 %.

The probability of payment for the achievement of the remaining regulatory milestone by the expiration date was reduced to 12.5 % at December 31, 2022 from 15 % at December 31, 2021.

The reduction in the probability of payment is due to the likelihood of achievement prior to the expiration date being reduced to 50 % from 100 % due to revised timing in conducting clinical trial studies, whereas the probability of success in regulatory approval has improved to 25 % from 15 %.

As of December 31, 2022 and 2021, the contingent consideration liability related to the Flexion Acquisition was recognized in the amount of $ 28.1 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 December 31, 2022, the maximum potential remaining milestone payments to be paid are $ 43.0 million.

For the year ended December 31, 2022, the Company recognized a contingent consideration gain of $ 11.2 million due to the reduced probability of meeting the MyoScience contingent consideration milestones by December 31, 2023, the expiration date for achieving the remaining milestones.

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

At December 31, 2022, the probability of success for the regulatory milestone that has not yet been met was reduced to zero .

As of December 31, 2022 and 2021, the fair value associated with the contingent consideration liability related to the MyoScience Acquisition has been assessed as zero and $ 11.2 million, respectively.

Pacira BioSciences, Inc.

| 2022 Form 10-K | Page F-32

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

Assumption Flexion Ranges Utilized as of

December 31, 2021 MyoScience Ranges Utilized as of

December 31, 2022

Discount rates 14.9 % to 15.1 %

11.42 % to 12.13 %

Probability of achieving regulatory milestones 10.00 % to 15.00 %

Projected year of achieving regulatory milestones 2026 to 2028

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

Probability of payment for achievement of regulatory milestones 0 % to 12.5 %

Projected year of achieving or expiration of regulatory milestones 2030

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

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Balance at December 31, 2021 57,598

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

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

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

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

Fair value adjustments and accretion ( 29,476 )

Balance at December 31, 2022 $ 28,122

Available-for-Sale Investments

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 and noncurrent investments are reported in other comprehensive (loss) income.

At December 31, 2022, 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.

Treasury bill rate as an observable input.

The fair value of the asset-backed securities and corporate bonds is principally measured or corroborated by trade data for identical issues in which related trading activity is not sufficiently frequent to be considered a Level 1 input or that of comparable securities.

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

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

available-for-sale investments and are determined to be Level 2 instruments, which are measured at fair value using standard industry models with observable inputs.

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

Treasury bill rate as an observable input.

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

The following summarizes the Company’s investments at December 31, 2022 and 2021 (in thousands):

3 unchanged sentences

Commercial paper 134,423 23 ( 386 ) 134,060

Corporate bonds 9,936 102 — 10,038

federal agency bonds 41,971 — ( 337 ) 41,634

government bonds 2,003 — ( 18 ) 1,985

Subtotal 185,233 23 ( 744 ) 184,512

federal agency bonds 22,783 2 ( 66 ) 22,719

government bonds 14,499 — ( 9 ) 14,490

Subtotal 37,282 2 ( 75 ) 37,209

Total $ 222,515 $ 25 $ ( 819 ) $ 221,721

4 unchanged sentences

Corporate bonds 9,936 102 — 10,038

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

Subtotal 421,416 320 ( 31 ) 421,705

Government bonds 95,429 30 — 95,459

Subtotal 95,429 30 — 95,459

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

1 unchanged sentence

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

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

Equity and Convertible Note Investments

At December 31, 2021 and 2020, the Company held an equity investment of $ 4.1 million and $ 1.2 million, respectively, in GeneQuine Biotherapeutics GmbH, or GeneQuine, a privately held biopharmaceutical company headquartered in Hamburg, Germany.

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

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

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

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

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

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

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

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

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-33

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

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

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

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

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

At December 31, 2022 and 2021, the interest receivable recognized in prepaid expenses and other current assets was $ 0.8 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 and noncurrent available-for-sale investments and accounts receivable.

The Company maintains its cash and cash equivalents with high-credit quality financial institutions.

Such amounts may exceed federally-insured limits.

As of December 31, 2022, three wholesalers each accounted for over 10% of the Company’s accounts receivable at 34 %, 19 % and 18 %.

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

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

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

EXPAREL revenues are primarily derived from major wholesalers that generally have significant cash resources.

EXPAREL and ZILRETTA revenues are primarily derived from major wholesalers and specialty distributors that generally have significant cash resources.

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

1 unchanged sentence

As of December 31, 2022 and 2021, the Company did not deem any allowances for credit losses on its accounts receivable necessary.

Pacira BioSciences, Inc.

| 2022 Form 10-K | Page F-34

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 13— STOCKHOLDERS’ EQUITY

3 unchanged sentences

No preferred stock was issued or outstanding at either December 31, 2022 or 2021.

Accumulated Other Comprehensive Income (Loss)

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

Accumulated Other Comprehensive (Loss) Income

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

Net Unrealized Gains

(Losses) From Available

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

(Losses) From Available-For-Sale Investments Unrealized Foreign Currency Translation Accumulated Other Comprehensive (Loss) Income

Balance at December 31, 2019 $ 322 $ — $ 322

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

Net unrealized loss on investments ( 3 ) — ( 3 )

Foreign currency translation adjustments — ( 1 ) ( 1 )

Balance at December 31, 2020 319 ( 1 ) 318

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

( 180 ) — ( 180 )

Foreign currency translation adjustments — 29 29

1 unchanged sentence

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

( 662 ) — ( 662 )

Foreign currency translation adjustments — 115 115

Balance at December 31, 2022 $ ( 523 ) $ 143 $ ( 380 )

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-34

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

(1) Net of a $ 0.2 million and $ 0.1 million tax benefit for the years ended December 31, 2022 and 2021, respectively.

NOTE 14— STOCK PLANS

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Employee Stock Purchase Plan

The Company’s 2014 Employee Stock Purchase Plan, or ESPP, was adopted by its board of directors in April 2014 and approved by the Company’s stockholders in June 2014.

The purpose of the ESPP is to provide a vehicle for eligible employees to purchase shares of the Company’s common stock at a discounted price and to help retain and motivate current employees as well as attract new talent.

The Company’s Amended and Restated Employee Stock Purchase Plan, or ESPP, was originally adopted by its board of directors in April 2014, approved by the Company’s stockholders in June 2014 and amended and restated in June 2022.

The June 2022 amendment and restatement increased the number of shares of common stock that may be sold under the plan by an additional 500,000 shares from the originally provided 500,000 shares.

The purpose of the ESPP is to provide a vehicle for

Pacira BioSciences, Inc.

| 2022 Form 10-K | Page F-35

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

eligible employees to purchase shares of the Company’s common stock at a discounted price and to help retain and motivate current employees as well as attract new talent.

Under the ESPP, up to 1,000,000 shares of common stock may be sold.

The plan expires in June 2024.

The ESPP expires in June 2032.

The ESPP is intended to qualify as an “employee stock purchase plan” within the meaning of Section 423 of the Internal Revenue Code, or IRC.

2 unchanged sentences

During an offering period, eligible employees have the opportunity to elect to purchase shares of the Company’s common stock on the purchase dates of June 30 and December 31 (or the last trading day of an offering period).

The per share purchase price will be equal to the lesser of 85 % of the fair market value of the Company’s common stock on either the offering date or the purchase date.

The per share purchase price is equal to 85 % of the fair market value of the Company’s common stock on either the offering date or the purchase date, whichever is lesser.

During the year ended December 31, 2022, 71,301 shares were purchased and issued through the ESPP.

11 unchanged sentences

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

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

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-35

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company recognized stock-based compensation expense in its consolidated statements of operations for the years ended December 31, 2022, 2021 and 2020 as follows (in thousands):

11 unchanged sentences

Related income tax benefit $ 10,219 $ 8,989 $ 8,578

Pacira BioSciences, Inc.

| 2022 Form 10-K | Page F-36

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table summarizes the Company’s stock option activity and related information for the period from December 31, 2019 to December 31, 2022:

Options Weighted

Stock Options Weighted

Exercise Price (Per Share) Weighted Average

19 unchanged sentences

Exercisable at December 31, 2022 4,224,921 $ 50.51 5.17 $ 1,997

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

Vested and expected to vest as of December 31, 2022 6,272,994 $ 52.38 6.28 $ 2,011

As of December 31, 2022, $ 45.4 million of total unrecognized compensation cost related to unvested stock options is expected to be recognized over a weighted average period of 2.6 years.

2 unchanged sentences

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

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-36

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Year Ended December 31,

6 unchanged sentences

Expected term of options 4.92 years 5.36 years 5.36 years

Pacira BioSciences, Inc.

| 2022 Form 10-K | Page F-37

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table summarizes the Company’s RSU activity and related information for the period from December 31, 2019 to December 31, 2022:

of Units Weighted

Restricted Stock Units Weighted

Average Grant

14 unchanged sentences

Forfeited ( 95,768 ) 56.00

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

Unvested and expected to vest as of December 31, 2022 1,149,462 $ 57.26 $ 44,381

As of December 31, 2022, $ 52.7 million of total unrecognized compensation cost related to unvested RSUs is expected to be recognized over a weighted average period of 2.9 years.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 15— NET INCOME (LOSS) PER SHARE

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

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

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

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

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

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

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

NOTE 15— NET INCOME PER SHARE

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

If the Company reported a net loss for the year, no potentially dilutive securities would be included in the computation of diluted net loss per share.

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

ASU 2020-06 was adopted on January 1, 2022 and requires the Company to use the if-converted method to calculate the number of potentially dilutive shares for convertible debt.

Under the if-converted method, adjustments are made to the diluted net income per common share calculation as if the Company had converted the convertible debt on the first day of each period presented.

Adjustments to the numerator are made to add back the interest expense associated with the convertible debt on a post-tax basis.

Adjustments to the denominator reflect the number of shares assumed to be convertible at the beginning of the period.

For additional information regarding the adoption of ASU 2020-06, see Note 3, Recent Accounting Pronouncements .

For the years ended December 31, 2021 and 2020, the Company used the treasury stock method to calculate dilutive shares on its convertible debt.

The following table sets forth the computation of basic and diluted net income per common share for the years ended December 31, 2022, 2021 and 2020 (in thousands, except per share amounts):

Year Ended December 31,

2022 2021 2020

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

Weighted average shares of common stock outstanding—basic 44,262 42,671 41,513

Net income—basic $ 15,909 $ 41,980 $ 145,523

Weighted average common shares outstanding—basic 45,521 44,262 42,671

Computation of diluted securities:

3 unchanged sentences

Dilutive effect of ESPP purchase options 4 2 1

Weighted average shares of common stock outstanding—diluted 45,630 43,682 41,513

Net income (loss) per share:

Basic net income (loss) per common share $ 0.95 $ 3.41 $ ( 0.27 )

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

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

Weighted average common shares outstanding—diluted 46,538 45,630 43,682

Net income per share:

Basic net income per common share $ 0.35 $ 0.95 $ 3.41

Diluted net income per common share $ 0.34 $ 0.92 $ 3.33

The following table summarizes the outstanding stock options, RSUs, ESPP purchase options 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):

Year Ended December 31,

1 unchanged sentence

Weighted average number of stock options 2,821 2,141 4,237

Convertible senior notes (1)

Weighted average number of RSUs 417 116 99

1 unchanged sentence

Total 9,451 2,270 4,352

(1) The convertible senior notes were antidilutive for the year ended December 31, 2022, in conjunction with a $ 5.1 million if-converted method adjustment to the numerator that adds back the interest expense associated with the convertible debt on a post-tax basis under ASU 2020-06.

Pacira BioSciences, Inc.

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NOTE 16— INCOME TAXES

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

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

Year Ended December 31,

3 unchanged sentences

Foreign ( 7,766 ) ( 8,347 ) 3,089

Total income (loss) before income taxes $ 56,403 $ 20,089 $ ( 10,748 )

Total income before income taxes $ 13,302 $ 56,404 $ 20,089

Current taxes:

7 unchanged sentences

Total deferred taxes $ ( 7,945 ) $ 10,872 $ ( 126,613 )

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

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

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

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

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

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-39

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

A reconciliation of income taxes at the U.S.

federal statutory rate to the provision for income taxes is as follows:

Total income tax (benefit) expense $ ( 2,607 ) $ 14,424 $ ( 125,434 )

A reconciliation of income tax (benefit) expense at the U.S.

federal statutory rate to the provision for income taxes is as follows (dollars in thousands):

Year Ended December 31,

2022 2021 2020

federal statutory rate 21.00 % 21.00 % 21.00 %

Amount Tax Rate Amount Tax Rate Amount Tax Rate

statutory rate applied to income before taxes $ 2,793 21.00 % $ 11,845 21.00 % $ 4,219 21.00 %

State taxes ( 448 ) ( 3.37 ) % 2,154 3.82 % 632 3.15 %

Foreign taxes 248 1.86 % ( 651 ) ( 1.15 ) % 639 3.18 %

Executive compensation 1,267 9.53 % 719 1.27 % 765 3.81 %

Change in valuation allowance 2,871 21.58 % 3,695 6.55 % ( 130,150 ) ( 647.87 ) %

1 unchanged sentence

Tax credits ( 2,542 ) ( 19.11 ) % ( 1,690 ) ( 3.00 ) % ( 1,591 ) ( 7.92 ) %

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

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

Interest expense ( 3,477 ) ( 26.14 ) % — — % — — %

Contingent consideration ( 3,841 ) ( 28.88 ) % 247 0.44 % — — %

Nondeductible expenses 1,164 8.75 % 1,929 3.42 % 149 0.74 %

Reserves 984 7.40 % ( 738 ) ( 1.31 ) % 1,539 7.66 %

338(g) tax election — % — % ( 9.61 ) %

Convertible debt — — % — — % ( 1,048 ) ( 5.22 ) %

Other 169 1.27 % ( 942 ) ( 1.67 ) % ( 372 ) ( 1.84 ) %

Effective tax rate 25.57 % ( 624.39 ) % ( 2.49 ) %

The Company’s effective tax rates of 25.57 %, ( 624.39 )% and ( 2.49 )% for the years ended December 31, 2021, 2020 and 2019, respectively, differed from the expected U.S.

statutory tax rate of 21.0 %.

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

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

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

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

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

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

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

Income tax (benefit) expense and effective tax rate $ ( 2,607 ) ( 19.60 ) % $ 14,424 25.57 % $ ( 125,434 ) ( 624.39 ) %

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

Significant components of the Company’s deferred tax assets and liabilities at December 31, 2022 and 2021 are as follows (in thousands):

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Deferred revenue — 2,430

Inventory 572 1,345

Inventory reserves 4,889 572

Other 11,036 2,441

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The Company also had state NOLs and state tax credit carryforwards of $ 518.0 million and $ 6.5 million, respectively, which are subject to change on an annual basis due to variations in the Company’s annual state apportionment factors.

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

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

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

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NOLs do not expire.

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

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

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

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

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

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

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

As a result of these ownership changes, the Company estimates $ 516.2 million of federal NOLs are subject to annual limitations and are estimated to be available as follows:

$ 32.6 million will come available in 2023, $ 32.5 million in 2024, $ 32.4 million in 2025, $ 28.3 million in 2026, and $ 6.9 million in 2027 and thereafter.

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

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

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

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

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

The Company had a net increase in its valuation allowance of $ 3.9 million and $ 16.5 million for the years ended December 31, 2022 and 2021, respectively.

The current year net increase in The Company’s valuation allowance includes $ 2.5 million against U.S.

capital loss carryforwards, $ 0.9 million against Flexion Acquisition state attributes and $ 0.5 million against foreign net deferred tax assets.

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

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

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

In 2022 , the Company recorded a $ 2.7 million net reduction to unrecognized tax benefits, or UTBs of which $ 3.7 million is a full reduction in Flexion acquired tax credits, offset by a $ 0.2 million increase related to prior year tax credit and $ 0.8 million related to tax credit positions taken during the year.

The Company’s UTB liability at December 31, 2022 was $ 6.3 million.

The change in the Company’s UTBs for the year ended December 31, 2022 is summarized as follows (in thousands):

Balance at December 31, 2020 $ 6,076

Balance as December 31, 2020 $ 6,076

Reduction for prior year positions ( 1,355 )

Additions for current year positions 4,300

Balance at December 31, 2021 9,021

Reduction for prior year positions ( 3,526 )

Additions for current year positions 827

Balance at December 31, 2022 $ 6,322

The UTBs as of December 31, 2022, 2021 and 2020 would, if subsequently recognized, favorably impact the effective income tax rate.

The Company regularly assesses the likelihood of additional tax assessments by jurisdiction and, if necessary, adjusts its reserve for UTBs based on new information or developments.

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

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

The company contributes assets to a rabbi trust to accumulate funds to pay benefits under the DCP.

Funds held in the rabbi trust must be used to pay benefits to DCP participants, except in the case of the Company’s bankruptcy or insolvency, in which case, they become subject to claims by the Company’s creditors.

The Company recognized $ 0.3 million of related compensation expense for its DCP discretionary match for the year ended December 31, 2022 and $ 0.2 million for each of the years ended December 31, 2021 and 2020.

The carrying value of assets held in the rabbi trust substantially equaled the DCP liability as of both December 31, 2022 and 2021, with balances of $ 4.3 million and $ 2.6 million, respectively.

The rabbi trust asset is classified within other assets and the DCP liability is classified within other liabilities in the consolidated balance sheets.

Pacira BioSciences, Inc.

| 2022 Form 10-K | Page F-42

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Cash Long-Term Incentive Plan

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

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

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

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

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

The first performance period began on January

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-42

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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

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

For the years ended December 31, 2022 and 2021, the Company recognized $ 1.0 million and $ 1.2 million of related compensation expense under the LTIP, respectively, all of which related to the 2021 performance period.

Amounts earned for the 2021 performance year are payable to participants in January 2025 after the three-year vesting period concludes.

No amounts were earned for the 2022 performance period.

As of December 31, 2022 and 2021, there was $ 2.2 million and $ 1.2 million included in other liabilities in the consolidated balance sheets, respectively.

NOTE 18— ACQUISITION-RELATED CHARGES (GAINS), IMPAIRMENT AND OTHER

Acquisition-related charges (gains), impairment and other for the years ended December 31, 2022, 2021 and 2020 are summarized below (in thousands):

Year Ended December 31,

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MyoScience contingent consideration ( 11,184 ) ( 2,163 ) 5,204

Termination of Nuance agreement 3,000 — —

Impairment of acquired IPR&D 26,134 — —

Termination of license agreement 3,000 — —

Nuance Biotech Co.

agreement dissolution costs — 3,000 —

Discontinuation of DepoCyt(e) — — ( 188 )

Department of Justice settlement — — 3,500

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

Total acquisition-related charges (gains), impairment and other $ 10,903 $ 42,911 $ 5,166

Flexion Acquisition

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

See Note 5 , Acquisitions , for more information.

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

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

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

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

The Company recognized acquisition-related and other costs of $ 11.2 million and $ 40.2 million during the years ended December 31, 2022 and 2021, respectively, primarily for severance, legal fees, third-party services and other one-time charges related to the Flexion Acquisition.

See Note 5, Flexion Acquisition , for more information.

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

For the year ended December 31, 2022, the Company recognized a contingent consideration gain of $ 18.3 million due to a decrease to the fair value of its contingent consideration.

From the date of the acquisition through December 31, 2021, the Company recorded a contingent consideration charge of $ 1.2 million.

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

MyoScience Acquisition

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

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

For more information see Note 21, Commitments and Contingencies .

The 2020 charges relate to acquisition-related accounting services.

The 2019 charges include $ 4.2 million for advisory costs, including legal, financial, accounting and tax services and $ 0.7 million for separation costs, asset write-downs and other restructuring charges.

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

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

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

In addition, the Company terminated a number of existing distributor agreements that were maintained by MyoScience.

The Company recognized contingent consideration gains of $ 11.2 million and $ 2.2 million for the years ended December 31, 2022 and 2021, respectively, and a contingent consideration charge of $ 5.2 million for the year ended December 31, 2020.

See Note 12, 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.

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The Company recognized acquisition-related and other charges of $ 0.7 million and $ 0.2 million during the years ended December 31, 2021 and 2020, respectively, related to one-time termination benefits and fees associated with the MyoScience Acquisition.

Impairment of Acquired IPR&D

For the year ended December 31, 2022, an impairment of $ 26.1 million for an acquired IPR&D intangible asset related to ZILRETTA for the treatment of OA pain of the shoulder was recognized based on the amount its previous carrying value of $ 60.0 million exceeded its fair value of $ 33.9 million.

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

Termination of License Agreement

The Company recognized expense of $ 3.0 million in the year ended December 31, 2022 related to the termination of a license agreement.

See Note 20, Commitments and Contingencies , for more information.

Nuance Biotech Co.

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

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

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

DepoCyt(e) Discontinuation

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

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

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

Department of Justice Inquiry Settlement

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

Department of Justice inquiry.

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

The Company recorded a gain of $ 0.2 million during the year ended December 31, 2020 related to the discontinuation of its DepoCyt(e) manufacturing activities in June 2017.

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

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

NOTE 19— COMMERCIAL PARTNERS AND OTHER AGREEMENTS

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

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

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

Commercial production began in February 2019.

The Company is now utilizing a second, larger-scale dedicated manufacturing suite.

Under these agreements, the Company makes monthly base fee payments to Thermo Fisher.

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

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

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

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

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

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

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

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

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

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

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

Unless earlier terminated (other than termination by the Company in the event that Thermo Fisher does not

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

until it expires or is terminated.

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

meet specified milestones or for a breach by Thermo Fisher), the Company will be obligated to pay for the costs incurred by Thermo Fisher associated with the removal of its manufacturing equipment and for Thermo Fisher’s termination costs up to a specified capped amount.

Eurofarma Laboratories S.A.

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Aratana began purchasing bupivacaine liposome injectable suspension product in 2016, which they market under the trade name NOCITA ® (a registered trademark of Aratana) for veterinary use.

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-45

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Hong Kong Pharma Tainuo Ltd.

Prior to the Flexion Acquisition, in March 2020, Flexion entered into an exclusive license agreement with Hong Kong Tainuo Pharma Ltd., or HK Tainuo, and Jiangsu Tainuo Pharmaceutical Co.

Ltd., or Jiangsu Tainuo, a subsidiary of China Shijiazhuang Pharmaceutical Co, Ltd., for the development and commercialization of ZILRETTA in Greater China (consisting of mainland China, Hong Kong, Macau and Taiwan).

Under the terms of the agreement, HK Tainuo paid Flexion an upfront payment of $ 10.0 million during the year ended December 31, 2020 which was recorded as deferred revenue as of December 31, 2021.

The Company is also eligible to receive up to $ 32.5 million in aggregate development, regulatory and commercial sales milestone payments.

HK Tainuo is responsible for the clinical development, product registration and commercialization of ZILRETTA in Greater China.

The Company is solely responsible for the manufacture and supply of ZILRETTA to HK Tainuo for all clinical and commercial activities.

The terms related to product manufacturing and supply, including pricing and minimum purchase requirements agreed to in the license agreement, will be covered by a separate supply agreement, which has not yet been finalized.

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

The proceeds associated with the upfront payment have been recorded in long-term deferred revenue on the consolidated balance sheet, as there is uncertainty around the timing of when the revenue will be recognized.

NOTE 20— RELATED PARTY TRANSACTIONS

In April 2012, the Company entered into a consulting agreement with Dr.

Gary Pace, a director of the Company.

In connection with the consulting agreement, Dr.

Pace received an option to purchase 20,000 shares of common stock at an exercise price of $ 11.02 per share and an option to purchase 70,000 shares of common stock at an exercise price of $ 16.67 per share, the latter of which were fully exercised in 2020.

No services were provided under the consulting agreement in the years ended December 31, 2021, 2020, or 2019, and as of December 31, 2021 and 2020, there was nothing payable to Dr.

Pace for consulting services.

NOTE 20— COMMITMENTS AND CONTINGENCIES

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Except as described below, the Company is not presently a party to any legal proceedings that it believes to be material, and is not aware of any pending or threatened litigation against the Company which it believes could have a material adverse effect on its business, operating results, financial condition or cash flows.

Pacira BioSciences, Inc.

| 2022 Form 10-K | Page F-45

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

MyoScience Milestone Litigation

In August 2020, the Company and its subsidiary, Pacira CryoTech, Inc.

(“Pacira CryoTech”), filed a lawsuit in the Court of Chancery of the State of Delaware against Fortis Advisors LLC (“Fortis”), solely in its capacity as representative for the former securityholders of MyoScience, and certain other defendants, seeking declaratory judgment with respect to certain terms of the merger agreement for the MyoScience Acquisition (the “Merger Agreement”), specifically related to the achievement of certain milestone payments under the Merger Agreement.

In addition, the Company and Pacira CryoTech sought general, special and compensatory damages against the other defendants related to breach of fiduciary duties in connection with the purported achievement of milestone payments under the Merger Agreement, and breach of the Merger Agreement and certain other agreements with the defendants.

In October 2020, Fortis filed an answer and counterclaim against the Company and Pacira CryoTech seeking to recover certain milestone payments under the Merger Agreement.

(“Pacira CryoTech”), filed a lawsuit in the Court of Chancery of the State of Delaware against Fortis Advisors LLC (“Fortis”), solely in its capacity as representative for the former securityholders of MyoScience, and certain other defendants, seeking declaratory judgment with respect to certain terms of the merger agreement for the MyoScience Acquisition (the “MyoScience Merger Agreement”), specifically related to the achievement of certain milestone payments under the MyoScience Merger Agreement.

In addition, the Company and Pacira CryoTech sought general, special and compensatory damages against the other defendants related to breach of fiduciary duties in connection with the purported achievement of milestone payments under the MyoScience Merger Agreement, and breach of the MyoScience Merger Agreement and certain other agreements with the defendants.

In October 2020, Fortis filed an answer and counterclaim against the Company and Pacira CryoTech seeking to recover certain milestone payments under the MyoScience Merger Agreement.

The total remaining value of these milestones is $ 30.0 million, plus attorneys’ fees.

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11,033,495 (the ’495 patent).

Pacira BioSciences, Inc.

| 2021 Form 10-K | Page F-46

PACIRA BIOSCIENCES, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

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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 their outcome at this time.

Research Development Foundation

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RDF has the right to terminate the agreement for an uncured material breach by the Company, in connection with its bankruptcy or insolvency or if it directly or indirectly opposes or disputes the validity of the assigned patent rights.

The Company’s U.S.

11,033,495 issued on June 15, 2021.

The Company’s ’495 patent issued on June 15, 2021.

Thereafter, RDF asserted that the issuance of that patent extends the Company’s royalty obligations under the agreement until 2041.

The Company believes that the royalty period under the agreement was set to end on December 24, 2021 with the expiration of its U.S.

The Company believes that the royalty period under the agreement ended on December 24, 2021 with the expiration of its U.S.

Because of the disagreement over the interpretation of the agreement, in December 2021, the Company filed a declaratory judgment lawsuit in the U.S.

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During the pendency of the lawsuit, the Company will continue to pay royalties to RDF under protest, however, the Company is unable to predict the outcome of this action at this time.

Department of Justice Inquiry Settlement

In April 2015, the Company received a subpoena from the U.S.

Department of Justice, U.S.

Attorney’s Office for the District of New Jersey pertaining to marketing and promotional practices related to EXPAREL.

In July 2020, the Company formally entered into settlement agreements that resolved all outstanding investigations and claims by the United States Department of Justice, the United States Department of Health and Human Services, various States Attorneys’ General and a private plaintiff.

This agreement concluded a five-year investigation related to the sale and marketing of EXPAREL.

Under the various settlement agreements, the Company paid a global settlement of $ 3.5 million, which was recorded in acquisition-related charges, product discontinuation and other in the consolidated financial statements for the year ended December 31, 2019.

The Company expressly denies all allegations and contentions and has admitted no wrongdoing in connection with the settlement agreements.

The Company has been given assurances that this concluded the investigation that originated from the U.S.

Department of Justice subpoena in April 2015.

Purchase Obligations

The Company has approximately $ 50.3 million of minimum, non-cancelable contractual commitments for contract manufacturing services and $ 9.2 million of minimum, non-cancelable contractual commitments for the purchase of certain raw materials as of December 31, 2021.

Pacira BioSciences, Inc.

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NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Purchase Obligations

The Company has approximately $ 73.3 million of minimum, non-cancelable contractual commitments for contract manufacturing services and $ 5.2 million of minimum, non-cancelable contractual commitments for the purchase of certain raw materials as of December 31, 2022.

Subsequent to December 31, 2022, the Company entered into an additional $ 2.8 million of minimum, non-cancelable contractual commitments for marketing sponsorships.

Other Commitments and Contingencies

Termination of License Agreement

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., a subsidiary of China Shijiazhuang Pharmaceutical Co, Ltd., for the development and commercialization of ZILRETTA in Greater China (consisting of mainland China, Hong Kong, Macau and Taiwan).

Under the terms of the agreement, HK Tainuo paid Flexion an upfront payment of $ 10.0 million during the year ended December 31, 2020 which was recorded as deferred revenue as of December 31, 2021.

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

HK Tainuo was responsible for the clinical development, product registration and commercialization of ZILRETTA in Greater China.

The Company was solely responsible for the manufacture and supply of ZILRETTA to HK Tainuo for all clinical and commercial activities.

The terms related to product manufacturing and supply, including pricing and minimum purchase requirements agreed to in the license agreement, were to be covered by a separate supply agreement which was never finalized.

In July 2022, the Company submitted notice to HK Tainuo of its intent to pursue termination of the license agreement.

As of December 31, 2022, $ 13.0 million was recorded within accrued expenses in the consolidated balance sheet.

The $ 13.0 million related to the termination of the license agreement was subsequently paid in January 2023.

Pediatric Trial Commitments

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Contingent Milestone Payments

Refer to Note 5, Acquisitions , for information on potential contingent milestone payments related to the MyoScience and Flexion acquisitions.

PCRX-201 and PCRX-301

PCRX-201 (formerly FX-201) and PCRX-301 (formerly FX-301) were added to the Company’s portfolio as part of the Flexion Acquisition.

Prior to the Flexion Acquisition, in February 2017, Flexion entered into an agreement with GeneQuine to acquire the global rights to PCRX-201, a gene therapy product candidate.

As part of the agreement, up to an aggregate of $ 56.0 million of payments could become due upon the achievement of certain development and regulatory milestones.

Prior to the Flexion Acquisition, in September 2019, Flexion entered into a definitive agreement with Xenon Pharmaceuticals, Inc.

to acquire the global rights to PCRX-301, a locally administered Na V 1.7 inhibitor.

As part of the agreement, up to an aggregate of $ 45.8 million of payments could become due upon the achievement of certain development and regulatory milestones and up to $ 75.0 million of payments could become due for sales-related milestones.

One-Time Termination Benefits

The Company has communicated to a select number of employees a commitment to provide one-time termination benefits in the event that a facility closure occurs.

The Company is recognizing these expenses ratably over the remaining service period required.

The Company currently estimates the total cost of these one-time benefits to be approximately $ 1.1 million.

During the year ended December 31, 2021, the Company recognized $ 0.7 million in one-time termination charges, which are included in acquisition-related (gains) charges, product discontinuation and other in the consolidated statements of operations.

Refer to Note 5, Flexion Acquisition and Note 12 , Financial Instruments , for information on potential contingent milestone payments related to the Flexion Acquisition and MyoScience Acquisition.

PCRX-201 was added to the Company’s portfolio as part of the Flexion Acquisition as discussed in Note 5, Flexion Acquisition .

Prior to the Flexion Acquisition, in February 2017, Flexion entered into an agreement with GQ Bio Therapeutics GmbH (formerly named GeneQuine Biotherapeutics GmbH) to acquire the global rights to PCRX-201, a gene therapy product candidate.

As part of the agreement, up to an aggregate of $ 56.0 million of payments could become due upon the achievement of certain development and regulatory milestones, including up to $ 4.5 million through initiation of a Phase 2 proof of concept clinical trial and, following successful proof of concept, up to an additional $ 51.5 million in development and global regulatory approval milestone payments.

Pacira BioSciences, Inc.

1 unchanged sentence

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

What changed 10-K

Item 9A. Controls and Procedures