Pacira BioSciences, Inc.
Annual Report 2022

Table of Contents

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K

(Mark One)
☒

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934

For the Fiscal Year Ended: December 31, 2022

Or

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
ACT OF 1934

For the transition period from     to

Commission File Number: 001-35060

PACIRA BIOSCIENCES, INC.
(Exact Name of Registrant as Specified in its Charter)

Delaware
(State or Other Jurisdiction of
Incorporation or Organization)

51-0619477
(I.R.S. Employer
 Identification No.)

5401 West Kennedy Boulevard, Suite 890
Tampa, Florida
33609
(Address and Zip Code of Principal Executive Offices)

(Registrant’s Telephone Number, Including Area Code)

(813) 553-6680

Title of each class

Common Stock, par value $0.001 per share

Trading symbol

PCRX

Name of each exchange
on which registered
Nasdaq Global Select Market

Securities registered pursuant to Section 12(b) of the Act:

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes x    No o

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o    No x

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934

during the preceding 12 months (or for such shorter period that the registrant was required to file such reports) and (2) has been subject to such filing
requirements for the past 90 days. Yes x    No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of

Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such
files). Yes x   No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an
emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company”
in Rule 12b-2 of the Exchange Act.

 
 
 
 
 
 
 
 
 
Large accelerated filer
Non-accelerated filer

☒
☐

Accelerated filer
Smaller reporting company
Emerging growth company

☐
☐
☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any

new or revised financial accounting standards pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal

control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or
issued its audit report. Yes x    No o

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the

filing reflect the correction of an error to previously issued financial statements. o

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation

received by any of the registrant’s executive officers during the relevant recovery period pursuant to § 240.10D-1(b). o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐    No x

The aggregate market value of the registrant’s voting stock held by non-affiliates of the registrant, based upon the closing sale price of the common stock

as reported on the Nasdaq Global Select Market on June 30, 2022, the last trading day of the registrant’s most recently completed second fiscal quarter, of
$58.30 per share was approximately $1.9 billion. Shares of common stock held by each director and executive officer (and their respective affiliates) and by
each person who owns 10 percent or more of the outstanding common stock or who is otherwise believed by the registrant to be in a control position have been
excluded. This determination of affiliate status is not necessarily a conclusive determination for other purposes.

As of February 24, 2023, 45,952,450 shares of the registrant’s common stock, $0.001 par value per share, were outstanding.

DOCUMENTS INCORPORATED BY REFERENCE

Part III of this Annual Report on Form 10-K incorporates certain information by reference from the registrant’s proxy statement for the 2023 annual

meeting of stockholders to be filed with the Securities and Exchange Commission no later than 120 days after the end of the registrant’s fiscal year ended
December 31, 2022.

i

Table of Contents

SUMMARY OF RISK FACTORS

This risk factor summary includes those risks most material to our business, financial condition, results of operations or prospects. A full discussion of the

risks outlined in this summary, as well as those risks not outlined below, appear in Part I, Item 1A. Risk Factors in this Annual Report.

®
• Our success depends primarily on our ability to successfully commercialize EXPAREL  (bupivacaine liposome injectable suspension) and ZILRETTA

®

(triamcinolone acetonide extended-release injectable suspension).

• Our efforts to successfully commercialize EXPAREL and ZILRETTA are subject to many internal and external challenges.
• That the commercial success of our products may be severely hindered if we are unable to achieve and maintain adequate levels of third-party payer

coverage and reimbursement for the products we offer, on reasonable pricing terms.

• The significant competition we face from other pharmaceutical, medical device and biotechnology companies.
• The regulatory approval for any approved product being limited to those specific indications and conditions for which clinical safety and efficacy have

been demonstrated, and risks related to allegations of our failure to comply with such approved indications.

• If we are unable to establish and maintain effective marketing and sales capabilities or enter into agreements with third parties to market and sell our

products.

• Our reliance on third parties to perform many essential services for EXPAREL, ZILRETTA and iovera°  and the fact that we will rely on third parties

®

for any other products that we commercialize.

• That we may need to increase the size of our organization and effectively manage our sales force, and we may experience difficulties in managing such

growth.

• Our inability to manage our business effectively if we are unable to attract and retain key personnel.
• The potential product liability exposure we may face.
• Our failure to manufacture our products in sufficient quantities and at acceptable quality and pricing levels, or to fully comply with CGMP (as defined

below).

• That we may need to expand our manufacturing operations or outsource such operations to third parties.
• Our inability to continue manufacturing adequate quantities of our products.
• That our co-production and other agreements with Thermo Fisher (as defined below) may involve unanticipated expenses and delays.
• Our reliance on third parties for the timely supply of specified raw materials and equipment for the manufacture of EXPAREL, ZILRETTA and iovera°.
• That our future growth depends—in part—on our ability to identify, develop, acquire or in-license products.
• That we make substantial investments in research and development and if those investments are unsuccessful, it could materially adversely affect our

business, financial condition and results of operations.

• The use of hazardous materials in our business and that we must comply with environmental laws and regulations.
• The risk of system failures.
• That any collaboration arrangements that we may enter into in the future may not be successful.
• The expense, length and uncertain outcomes of our trials and if our trials fail to demonstrate the safety and efficacy of our drug products or medical

devices, it could prevent or significantly delay obtaining regulatory approvals.

• Our dependence on contract research organizations, clinical investigators and clinical sites to enroll patients in our clinical trials and sometimes other

third parties to manage the trials and to perform related data collection and analysis.

• Guidelines and recommendations published by various organizations could reduce the demand for or use of our products.
• Periodic litigation, which could result in losses or unexpected expense of time and resources.
• If a regulatory or enforcement agency determines that we are promoting or have in the past promoted the “off-label” use of our products.
• That we may not receive regulatory approval for any of our product candidates, or their approval may be delayed for various reasons.
• The regulatory clearance process, which may result in substantial delays, unexpected or additional costs and other unforeseen factors and limitations on

the types and uses of products we would be able to commercialize.

• That a regulatory authority may determine that our products or any of our product candidates have undesirable side effects.
• The substantial penalties we could face if we do not comply with federal, state and foreign laws and regulations relating to the healthcare business.
• The highly regulated and technically complex design, development, manufacture, supply and distribution of our products.
• Our failure to comply with the extensive regulatory requirements to which we and our products are subject.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 1

Table of Contents

• If the government or third-party payers fail to provide adequate coverage and payment rates for EXPAREL, ZILRETTA, iovera° or any future products,

or if hospitals or ASCs (as defined below) choose to use alternative therapies that are less expensive.

• Public concern regarding the safety of drug products such as EXPAREL and ZILRETTA and medical device products such as iovera°.
• That the patents and the patent applications that we have covering our pMVL (as defined below) products are limited to specific injectable formulations,

processes and uses of drugs encapsulated in our pMVL drug delivery technology and our market opportunity for our product candidates may be
limited by the lack of patent protection for the active ingredient itself and other formulations and delivery technology and systems that may be
developed by competitors.

• That the patents and the patent applications that we have covering iovera° are primarily limited to specific handheld cryogenic needle devices that are

cooled by a cryogen and methods for applying cryotherapy to nerve tissue using the cryogenic devices.

• Our inability ensure the protection of our proprietary rights and that all patents will eventually expire.
• If we are sued for infringing the intellectual property rights of third parties.
• That we may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.
• Servicing our indebtedness, which requires a significant amount of cash, and that we may not have sufficient cash flow from our business to pay our

substantial indebtedness.

• That our Credit Agreement and the Indentures (each as defined below) each impose significant operating and financial restrictions on us and certain of

our subsidiaries, which may prevent us from capitalizing on business opportunities.

• That we may not have the ability to raise the funds necessary to settle conversions of the Notes (as defined below) in cash to the extent elected or to

repurchase the Notes upon a fundamental change, and our future indebtedness may contain limitations on our ability to pay cash upon conversion of
the Notes or limitations on our ability to repurchase the Notes.

• That our indebtedness could adversely affect our business, financial condition, and results of operations, as well as the ability to meet payment

obligations under our Credit Agreement and the Notes.

• The risk that despite our current level of indebtedness, we may be able to incur substantially more debt.
• The provisions of our charter documents and Delaware law that may have anti-takeover effects that could discourage an acquisition of us by others, even
if an acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management.

• That the price of our common stock may be subject to significant fluctuations and volatility.
• Our intention to not pay dividends on our common stock for the foreseeable future.
• That future sales in the public market or issuances of our common stock could lower the market price for our common stock.
• That raising additional funds by issuing securities would cause dilution to existing stockholders and that raising funds through lending and licensing

arrangements may restrict our operations or require us to relinquish proprietary rights.

• A pandemic, epidemic or outbreak of a contagious disease (such as the COVID-19 pandemic, or fear of such an event.
• Our failure to maintain the privacy and security of personal and business information.
• That rising inflation has increased costs related to materials, labor, and services, among other things.
• That we may face risks related to environmental, social and corporate governance issues.
• The significant losses we have incurred since our inception and that we may incur additional losses in the future.
• That a material impairment in the carrying value of goodwill or intangible assets could negatively affect our results of operation and financial condition.
• That we may need additional funding and may be unable to raise capital when needed, which would force us to delay, reduce or eliminate our product

development programs or commercialization efforts.

• The potential significant fluctuations in our quarterly operating results.
• Our inability to successfully integrate the businesses and personnel of acquired companies and businesses, and inability to realize the anticipated

synergies and benefits of such acquisitions.

• Our inability to realize the benefits from the Flexion Acquisition (as defined below), being substantially dependent on the commercial success of
ZILRETTA and the cost savings resulting from the timely and effective integration of the operations of Pacira and Flexion (as defined below).

• The use of our net operating loss carryforwards and research and development tax credits being limited.
• Changes in data privacy and protection laws and regulations, particularly in Europe and the State of California.
• Risks related to cybersecurity threats and incidents.
• Significant changes in the global climate, extreme weather conditions and water availability.
• Our international operations, which expose us to numerous and sometimes conflicting legal and regulatory requirements.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 2

Table of Contents

PACIRA BIOSCIENCES, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2022

TABLE OF CONTENTS

Summary of Risk Factors
Table of Contents
Cautionary Note Regarding Forward Looking Statements

PART I
Item 1.
Item 1A.
Item 1B.
Item 2.
Item 3.
Item 4.

PART II
Item 5.
Item 6.
Item 7.
Item 7A.
Item 8.
Item 9.
Item 9A.
Item 9B.
Item 9C.

PART III
Item 10.
Item 11.
Item 12.
Item 13.
Item 14.

PART IV
Item 15.
Item 16.

Business
Risk Factors
Unresolved Staff Comments
Properties
Legal Proceedings
Mine Safety Disclosures

Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
Reserved
Management’s Discussion and Analysis of Financial Condition and Results of Operations
Quantitative and Qualitative Disclosures about Market Risk
Financial Statements and Supplementary Data
Changes in and Disagreements with Accountants on Accounting and Financial Disclosure
Controls and Procedures
Other Information
Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

Directors, Executive Officers and Corporate Governance
Executive Compensation
Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters
Certain Relationships and Related Transactions, and Director Independence
Principal Accountant Fees and Services

Exhibits, Financial Statement Schedules
Form 10-K Summary

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 3

Page #
1
3
4

5
5
35
68
68
68
68

69
69
70
70
81
81
81
81
82
82

82
82
82
82
82
82

83
83
86

 
 
Table of Contents

Cautionary Note Regarding Forward-Looking Statements

This Annual Report on Form 10-K (the “Annual Report”) and certain other communications made by us contain forward-looking statements within the
meaning of Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and the Private Securities Litigation Reform Act of 1995,
including, without limitation, statements related to: the Flexion Acquisition (as defined below) and the costs and benefits thereof, our growth and future
operating results and trends, our strategy, plans, objectives, expectations (financial or otherwise) and intentions, future financial results and growth potential,
including our plans with respect to the repayment of our indebtedness, anticipated product portfolio, development programs, patent terms, development of
products, strategic alliances and intellectual property. For this purpose, any statement that is not a statement of historical fact should be considered a forward-
looking statement. We often use the words “believe,” “anticipate,” “plan,” “estimate,” “expect,” “intend,” “may,” “will,” “would,” “could,” “can” and similar
expressions to help identify forward-looking statements. We cannot assure you that our estimates, assumptions and expectations will prove to have been
correct. Actual results may differ materially from these indicated by such forward-looking statements as a result of various important factors, including risks
relating to, among others: risks associated with acquisitions, such as the risk that the businesses will not be integrated successfully, that such integration may be
more difficult, time-consuming or costly than expected or that the expected benefits of the transaction will not occur; risks related to future opportunities and
plans for Flexion (as defined below) and its products, including uncertainty of the expected financial performance of Flexion and its products; the possibility
that if we do not achieve the perceived benefits of the Flexion Acquisition(as defined below) as rapidly or to the extent anticipated by financial analysts or
investors, the market price of our common stock could decline; the impact of the COVID-19 pandemic on elective surgeries, our manufacturing and supply
chain, global and United States, or U.S., economic conditions (including inflation and rising interest rates), and our business, including our revenues, financial
®
condition, cash flows and results of operations; the success of our sales and manufacturing efforts in support of the commercialization of EXPAREL
(bupivacaine liposome injectable suspension), ZILRETTA  (triamcinolone acetonide extended-release injectable suspension) and iovera° ; the rate and degree
of market acceptance of EXPAREL, ZILRETTA and iovera°; the size and growth of the potential markets for EXPAREL, ZILRETTA and iovera° and our
ability to serve those markets; our plans to expand the use of EXPAREL, ZILRETTA and iovera° to additional indications and opportunities, and the timing and
success of any related clinical trials for EXPAREL, ZILRETTA and iovera°; the commercial success of EXPAREL, ZILRETTA and iovera°; the related timing
and success of United States Food and Drug Administration, or FDA, supplemental New Drug Applications, or sNDAs, and premarket notification 510(k)s; the
related timing and success of European Medicines Agency, or EMA, Marketing Authorization Applications, or MAA; our plans to evaluate, develop and pursue
additional product candidates utilizing our proprietary multivesicular liposome, or pMVL, drug delivery technology; the approval of the commercialization of
our products in other jurisdictions; clinical trials in support of an existing or potential pMVL-based product; our commercialization and marketing capabilities;
our ability to successfully complete an EXPAREL capacity expansion project in San Diego, California; our ability to successfully complete a ZILRETTA
capital project in Swindon, England; the outcome of any litigation; the ability to successfully integrate Flexion or any future acquisitions into our existing
business; the recoverability of our deferred tax assets; assumptions associated with contingent consideration payments; and factors discussed in Part I-Item 1A.
Risk Factors.

®

®

The forward-looking statements included in this Annual Report represent our views as of the filing date of this Annual Report. Important factors could
cause our actual results to differ materially from those indicated or implied by forward-looking statements, and as such we anticipate that subsequent events and
developments will cause our views to change. Except as required by applicable law, we undertake no intention or obligation to update or revise any forward-
looking statements, whether as a result of new information, future events or otherwise, and readers should not rely on the forward-looking statements as
representing our views as of any date subsequent to the date of the filing of this Annual Report.

These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, levels of activity,

performance or achievements to differ materially from those expressed or implied by these statements. These factors include the matters discussed and
referenced in Part I-Item 1A. Risk Factors.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 4

Table of Contents

Item 1.    Business

References

PART I

Pacira BioSciences, Inc., a Delaware corporation, is the holding company for our California operating subsidiary named Pacira Pharmaceuticals, Inc. In

March 2007, we acquired Pacira Pharmaceuticals, Inc. from SkyePharma Holdings, Inc. (now a subsidiary of Vectura Group plc), or Skyepharma (the
“Skyepharma Acquisition”). In April 2019, we acquired MyoScience, Inc., a privately held medical technology company (the “MyoScience Acquisition”) and
in November 2021, we acquired Flexion Therapeutics, Inc., or Flexion, a publicly traded biopharmaceutical company the (“Flexion Acquisition”). Unless the
context requires otherwise, references to “Pacira,” “we,” the “Company,” “us” and “our” in this Annual Report refers to Pacira BioSciences, Inc., a Delaware
corporation, and its subsidiaries.

Corporate Information

We were incorporated in Delaware under the name Blue Acquisition Corp. in December 2006 and changed our name to Pacira, Inc. in June 2007. In

October 2010, we changed our name to Pacira Pharmaceuticals, Inc. and in April 2019, we changed our name to Pacira BioSciences, Inc. Our principal
executive offices and corporate headquarters are located in Tampa, Florida.

Trademarks and Service Marks

Pacira , EXPAREL , ZILRETTA , iovera° , the Pacira logo and other trademarks or service marks of Pacira appearing in this Annual Report are the

®

®

®

®

property of Pacira, and when first used in each part of this report, include the ® symbol.

This Annual Report contains additional trade names, trademarks and service marks of other companies, which may or may not appear with the ® or ™

symbol. The absence of these symbols does not in any way imply that the respective owner(s) will not assert their rights to such marks to the fullest extent
under applicable law. Our use of trademarks or trade names of other companies should not suggest any endorsement, sponsorship or other relationship with or
by such companies.

Overview

We are the industry leader in our commitment to non-opioid pain management and providing a non-opioid option to as many patients as possible to

redefine the role of opioids as a rescue therapy only. We are also developing innovative interventions to address debilitating conditions involving the
sympathetic nervous system, such as cardiac electrical storm, chronic pain and spasticity. We are advancing a pipeline of unique, safe, best-in-class products
across a variety of therapeutic areas that include acute postsurgical pain; acute and chronic osteoarthritis, or OA, pain, spasticity and stellate ganglion block. We
have three commercialized non-opioid treatments: EXPAREL  (bupivacaine liposome injectable suspension), a long-acting, local analgesic currently approved
for postsurgical pain management; ZILRETTA  (triamcinolone acetonide extended-release injectable suspension), an extended-release, intra-articular, or IA
(meaning in the joint), corticosteroid injection indicated for the management of OA knee pain; and iovera° , a novel, handheld device for delivering immediate,
long-acting, drug-free pain control using precise, controlled doses of cold temperature to a targeted nerve.

®

®

®

Strategy

To achieve our goal of global leadership in non-opioid pain management and regenerative health solutions, we are advancing a three-pronged strategy:

• Expanding the use of our opioid-free commercial assets. The COVID pandemic and opioid crises have intensified the need for opioid alternatives. In
the U.S., EXPAREL is the only opioid-free, long-acting local and regional analgesic approved for infiltration, field blocks and interscalene brachial
plexus nerve block to produce local or regional postsurgical analgesia. EXPAREL is also approved for infiltration in pediatric patients aged six years
and older in the U.S. In Europe, EXPAREL is approved as a brachial plexus block or femoral nerve block for treatment of post-operative pain in
adults, and as a field block for treatment of somatic post-operative pain from small- to medium-sized surgical wounds in adults and children aged six
years and older. Anesthesia-driven postsurgical pain management with long-acting field and nerve blocks utilizing EXPAREL are enabling the
migration of complex, painful surgeries to outpatient sites of care. ZILRETTA is the first and only extended-release, intra-articular therapy that can
provide major relief for OA knee pain for three months and has the potential to become an alternative to hyaluronic acid, or HA, and platelet rich
plasma, or PRP, injections or other early intervention treatments. With the iovera° system,

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 5

Table of Contents

healthcare providers can replace narcotics and radiofrequency ablation with an innovative drug-free nerve block. We believe the iovera° system is also
highly complementary to ZILRETTA. In addition to our current commercial opportunities, we are advancing label expansion activities. For
EXPAREL, we recently submitted an sNDA seeking expansion of our label to include sciatic nerve blocks in the popliteal fossa, as well as femoral
nerve blocks in the adductor canal, with an anticipated FDA action date under the Prescription Drug User Fee Act, or PDUFA, in the second half of
2023. We are also advancing a clinical development program for EXPAREL in patients under six years of age. For ZILRETTA, we plan to initiate a
Phase 3 study in shoulder OA and a Phase 4 study in Type 2 diabetes. For iovera°, we are developing new iovera° Smart Tips for chronic lower back
pain and spine procedures. We also plan to initiate a registration study of iovera° as a treatment for spasticity.

• Advancing our clinical-stage pipeline within multiple areas of unmet need. We have completed a Phase 1 study of PCRX-201, a novel, IA gene

therapy product candidate that produces the anti-inflammatory protein interleukin-1 receptor antagonist (IL-1Ra) treating OA pain in the knee. Based
upon compelling initial Phase 1 efficacy and safety data for PCRX-201, we are working with investigators and plan to request an FDA meeting to
discuss the regulatory pathway forward for OA of the knee, as well as a Regenerative Medicine Advanced Therapy, or RMAT, designation. We are
also advancing our pipeline of clinical-stage assets that utilize our proprietary multivesicular liposome (pMVL) technology. The pMVL carrier matrix
consists of microscopic, spherical, lipid-based particles composed of a honeycomb of numerous, non-concentric, internal aqueous chambers
containing the encapsulated active agent. Each chamber is separated from adjacent chambers by lipid membranes. Following injection, the pMVL
particles release the active agent over an extended period as the lipid membranes erode or reorganize. We are preparing to launch a Phase 1 study of
Dexamethosone-pMVL for low back pain (“PCRX-401”), a Phase 1 study of high-dose bupivacaine-pMVL for five or more days of pain relief
(“PCRX-501”), and a Phase 1 study of EXPAREL for intrathecal analgesia.

• Accessing complementary innovative assets using a combination of strategic investment, in-licensing, or acquisition. We believe EXPAREL,

ZILRETTA, iovera° and our pMVL drug delivery technology offer a strong foundation to address the opioid epidemic. Building on these proprietary
assets, we have also made investments in the musculoskeletal and chronic pain spaces. We plan to continue to advance these two key areas with a
focus on the knee and spine continuums of care and chronic pain. We are using a combination of strategic investments to support promising early-
stage platforms, as well as in-licensing or acquisition transactions to build-out a pipeline of innovation to improve patients’ journeys along the neural
pain pathway.

The Opioid Epidemic

Opioid addiction in the U.S. has reached epidemic proportions, with the U.S. Centers for Disease Control and Prevention, or CDC, reporting that over
107,000 Americans died from a drug overdose in the 12-month period ending March 2022—a 44 percent jump from the statistics reported two years earlier.
Opioids were involved in more than two-thirds of all drug overdose deaths reported, with synthetic opioids being the primary driver of the increase in fatalities.

In 2018, new research showed that patients received nearly 100 to 200 opioid pills to help manage pain from four common procedures ranging from
rotator cuff repair and hip replacement to knee replacement and sleeve gastrectomy. Further, one-quarter of orthopedic surgery patients were prescribed a daily
dose of opioids equal to 90 milligrams of morphine or more, which are doses so potent that the CDC says they put patients at high risk for overdose. A 2017
report shows that across the seven orthopedic and soft tissue surgical procedures examined, patients were prescribed an average of 82 opioid pills each to help
manage postsurgical pain. The research also indicates that close to nine percent of surgical patients became newly persistent users in 2017, continuing to take
these opioids at least three to six months after their procedure. Among patients having knee replacement surgery or a colectomy, newly persistent opioid users
climbed as high as 15 percent and 17 percent, respectively. Further, women were 40 percent more likely to become persistent opioid users than men; and among
persistent users, females were prescribed 15 percent more opioids than their male counterparts. These findings come from the report, United States for Non-
Dependence: An Analysis of the Impact of Opioid Overprescribing in America, based on an analysis of 2016 adjudicated medical and pharmacy claims data
conducted by QuintilesIMS.

LPGA Sponsorship

In February 2023, we announced a multi-year sponsorship with the Ladies Professional Golf Association, or LPGA, to make iovera° the official non-
opioid pain management partner of the LPGA. The sponsorship will aim to draw attention to the role non-opioid pain management options can play in curbing
the U.S. opioid epidemic. We will host initiatives at various LPGA tournaments to drive awareness and education on the availability of non-opioid
interventions as well as encourage fans to wear purple each September, which is recognized as Opioid Awareness Month.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 6

Table of Contents

Product Portfolio and Product Candidate Pipeline

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

table below:

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 7

Table of Contents

Our Commercial Products

EXPAREL (bupivacaine liposome injectable suspension)

EXPAREL was approved by the FDA in October 2011 and was commercially launched in the U.S. in April 2012. In the U.S., EXPAREL is currently

indicated in patients six years of age and older for single-dose infiltration to produce postsurgical local analgesia, and in adults as an interscalene brachial
plexus nerve block to produce postsurgical regional analgesia. Safety and efficacy have not been established in other nerve blocks. In November 2020, the
European Commission, or EC, granted marketing authorization for EXPAREL as a brachial plexus block or femoral nerve block for treatment of post-operative
pain in adults, and as a field block for treatment of somatic post-operative pain from small- to medium-sized surgical wounds in adults and children aged six
years and older. We launched EXPAREL in the United Kingdom, or U.K., and select European Union, or E.U., countries in November 2021. Since its initial
approval in 2011, more than 12 million patients have been treated with EXPAREL.

EXPAREL consists of bupivacaine, an amide-type local anesthetic, encapsulated in our pMVL drug delivery technology, which delivers bupivacaine over

time for extended analgesia. We believe that EXPAREL addresses a significant medical need for a safe and effective long-acting non-opioid postsurgical
analgesic and plays a significant role in opioid minimization strategies. EXPAREL is designed for recovery with minimal opioid use by (i) delivering targeted
local analgesia at the surgical site; (ii) reliably releasing bupivacaine over time for prolonged analgesia; (iii) eliminating the need for catheters and pumps that
may hinder recovery and (iv) providing long-lasting pain control while reducing the need for opioids.

Our net product sales of EXPAREL in 2022 were $536.9 million. For the years ended December 31, 2022, 2021 and 2020, net product sales of EXPAREL
accounted for 81%, 94% and 96% of our total revenues, respectively. The significant change in the 2022 percentage resulted from the recognition of a full year
of ZILRETTA net product sales after completing the Flexion Acquisition in November 2021.

ZILRETTA (triamcinolone acetonide extended-release injectable suspension)

ZILRETTA was approved by the FDA in October 2017 and launched in the U.S. shortly thereafter. ZILRETTA is the first and only extended-release,
intra-articular therapy for patients with OA knee pain. ZILRETTA uses a proprietary extended-release microsphere technology to slowly and continuously
releases triamcinolone acetonide, or TA, a commonly administered, immediate-release corticosteroid into the knee for approximately three months to provide
significant pain relief for 12 weeks, with some people experiencing pain relief through 16 weeks.

We added ZILRETTA to our commercial offering with the completion of the Flexion Acquisition in November 2021. ZILRETTA net product sales were
$105.5 million for the year ended December 31, 2022. In 2021, we recognized ZILRETTA net product sales of $12.7 million during the post-closing period of
the Flexion Acquisition of November 19, 2021 to December 31, 2021.

The iovera° system

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

targeted nerves. It has been FDA 510(k) cleared in the U.S., has a CE mark in the E.U. and is cleared for marketing in Canada for the blocking of pain. The
iovera° system is highly complementary to EXPAREL and ZILRETTA as a non-opioid therapy that alleviates pain using a non-pharmacological nerve block to
disrupt pain signals being transmitted to the brain from the site of injury or surgery. It is also indicated for the relief of pain and symptoms associated with
arthritis of the knee for up to 90 days. For the years ended December 31, 2022, 2021 and 2020, our net product sales of iovera° were $15.3 million, $16.2
million and $8.8 million, respectively.

EXPAREL Clinical Benefits

We believe EXPAREL can replace the use of bupivacaine delivered via elastomeric pumps as the foundation of a multimodal regimen for long-acting

postsurgical pain management. Based on our clinical data, EXPAREL:

•

•

•

provides long-lasting local or regional analgesia;

is a ready-to-use formulation;

expands easily with saline or lactated Ringer’s solution to reach a desired volume;

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 8

Table of Contents

•

•

leverages existing interscalene brachial plexus nerve block, field block and infiltration administration techniques; and

facilitates treatment of a variety of surgical sites.

We believe EXPAREL is a key component of long-acting postsurgical pain management regimens that reduce the need for opioids. Based on the clinical

data from our Phase 3 and Phase 4 clinical studies as well as data from retrospective health outcomes studies, EXPAREL significantly reduces opioid usage
while improving postsurgical pain management.

In our Phase 3 hemorrhoidectomy trial, EXPAREL:

•

•

•

•

delayed the median time to rescue analgesic use (opioids) to 15 hours for patients treated with EXPAREL versus one hour for patients treated
with placebo;

significantly increased the percentage of patients requiring no opioid rescue medication through 72 hours post-surgery to 28%, compared to
10% for placebo;

resulted in 45% less opioid usage through 72 hours post-surgery compared to placebo; and

increased the percentage of patients who were pain free at 24 hours post-surgery compared to placebo.

In our Phase 3 trial as an interscalene brachial plexus nerve block for upper extremity surgeries, EXPAREL:

•

•

•

decreased total opioid consumption by 78% (p<0.0001) from zero to 48 hours after surgery;

reduced pain scores by 46% versus placebo (p<0.0001); and

allowed 13% of patients who received EXPAREL to remain opioid-free for 48 hours after surgery (p<0.01) compared to one opioid-free patient
in the placebo arm.

In our Phase 3 trial as a femoral nerve block in the adductor canal in patients undergoing total knee arthroplasty, or TKA, EXPAREL:

•

•

achieved the primary endpoint by significantly reducing cumulative pain scores from zero to 96 hours after surgery compared with bupivacaine
HCl (p<0.01); and

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

In our Phase 3 trial as a sciatic nerve block in the popliteal fossa in patients undergoing bunionectomy, EXPAREL:

•

•

achieved the primary endpoint by significantly reducing cumulative pain scores from zero to 96 hours after surgery compared with bupivacaine
HCl (p<0.00001); and

achieved its secondary endpoints with statistically significant reductions in postsurgical opioid consumption through 96 hours (p<0.00001) and
the percentage of opioid-free subjects (p<0.001) compared with bupivacaine HCl.

EXPAREL can improve patient satisfaction and outcomes. We believe EXPAREL:

•

•

•

provides effective pain control without the need for expensive and difficult-to-use delivery technologies that extend the duration of action for
bupivacaine, such as elastomeric pumps, or opioids administered through patient-controlled analgesia, or PCA, when used as part of a
multimodal postsurgical pain regimen;

reduces the need for patients to be constrained by elastomeric pumps and PCA systems, which are barriers to earlier ambulation and may
introduce catheter-related issues, including infection; and

promotes maintenance of early postsurgical pain management, which may reduce the time spent in the intensive care unit.

Key EXPAREL Markets

EXPAREL-based enhanced recovery after surgery, or ERAS, protocols are becoming a cornerstone of opioid-sparing postsurgical pain management and

enabling the shifting of many complex, painful orthopedic procedures to the 23-hour stay environment.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 9

Table of Contents

Orthopedics

EXPAREL is used across multiple orthopedic procedures, including joint reconstruction, shoulder, spine, extremity procedures, and hip fractures.

Total joint arthroplasties are expected to grow rapidly in the coming years with a significant migration of these procedures from the inpatient hospital

setting to outpatient sites of care. EXPAREL-based regional analgesia as part of multimodal pain management protocols in enhanced ERAS pathways is
supporting this surgical migration. The clinical and economic benefits of EXPAREL in total joint arthroplasty procedures have been demonstrated in clinical
studies with EXPAREL use associated with significant reductions in opioid consumption, well-controlled pain management, shorter recovery time, same-day
discharge to home and high patient satisfaction.

EXPAREL is being adopted in an increasing number of spine surgeries as a key component of a multimodal pain management solution enabling rapid

recovery after surgery and a reduced reliance on opioids, which have been the mainstay in postsurgical pain control in the spine area for decades. Two
important patient groups are driving the spine market: first, pediatric cases, like adolescent scoliosis patients, who are undergoing highly invasive surgeries and
who until very recently only had opioids available to treat their pain, and second, adult degenerative patients who are often coming into surgery opioid-tolerant
and who may have already had multiple back surgeries. Managing postsurgical pain in these adult degenerative patients can be challenging due to their
established opioid tolerance, but by utilizing EXPAREL, healthcare providers can control their pain with a non-opioid approach, and when feasible based on
surgical intervention and patient characteristics, move many historical inpatient procedures to the 23-hour stay environment.

EXPAREL administered as a brachial plexus nerve block is a key and growing part of our business. An EXPAREL brachial plexus block provides pain

coverage for the upper quadrant for use in rotator cuff, shoulder arthroplasty, elbow, wrist, and hand procedures. Like other regional field blocks, our
anesthesiologist customers see the strong advantages of using brachial plexus blocks as a vehicle for shifting procedures to the outpatient setting by replacing
antiquated pumps and catheters, which often become dislodged and prevent a procedure from taking place in a 23-hour site of care. Additionally, EXPAREL
reimbursement is consistently improving as payers and self-insured employers continue to drive the shift from inpatient to outpatient care for a variety of
surgeries.

Abdominal and Colorectal

A variety of truncal blocks have emerged for use in abdominal and colorectal procedures. Transversus abdominis plane, or TAP, and erector spinae plane

blocks represent a significant market where EXPAREL is providing long-acting pain control for abdominal and spinal surgeries and supporting the migration of
these procedures to the 23-hour setting. We expect the expanding use of EXPAREL field blocks as the foundation of enhanced recovery protocols across
various abdominal and colorectal procedures to continue to be a significant growth driver.

Women’s Health

There is a significant and growing demand among women for managing pain with non-opioid options. Opioid addiction in women is growing at an
alarming rate and studies have shown that women are 40 percent more likely than men to become newly persistent users of opioids following surgery. Women’s
Health continues to be an important source of growth as anesthesia-driven EXPAREL-based TAP and pectoralis blocks take hold as institutional protocol for
Cesarean section, abdominoplasty, gynecologic oncology, mastectomy and breast reconstruction procedures.

Cardiothoracic

Cardiothoracic surgery is considered one of the most painful types of surgical procedures for both open and minimally invasive procedures. As a result,

opioids are widely used, but are often inadequate. Poorly controlled postoperative pain leads to the development of chronic persistent pain in as many as 40
percent of these patients and persistent opioid use after surgery is seen in over 10 percent of such patients. Regional anesthesia approaches have been evolving,
with EXPAREL replacing thoracic epidurals as an alternative method of producing long-lasting postsurgical analgesia.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 10

Table of Contents

Pediatrics

In March 2021, the FDA approved our sNDA to expand the EXPAREL label to include use in patients six years of age and older for single-dose
infiltration to produce postsurgical local analgesia. EXPAREL is the first and only FDA-approved long-acting local analgesic for the pediatric population as
young as age six. In November 2022, both the EMA’s Committee for Medicinal Products for Human Use, or CHMP, and the Medicines and Healthcare
Products Regulatory Agency, or MHRA, approved marketing authorization for an expanded indication of EXPAREL to include use in children aged six years
and older as a field block for treatment of somatic post-operative pain from small- to medium-sized surgical wounds.

Opioids, short-acting local anesthetics and catheter-based devices have been the historical mainstay in pediatric postsurgical pain management despite
safety implications and limited studies in children. The risks and complications of adult-based pain management approaches may be magnified in children with
50 percent of children reporting moderate to severe pain in the hospital after surgery and 20 percent of children reporting chronic pain 12 months after surgery.

EXPAREL is redefining the paradigm of care for postsurgical pain management in children as the market’s only clinically proven safe alternative for
long-acting, non-opioid postsurgical pain control in children aged 6 and over. There are approximately one million pediatric procedures per year in the U.S. We
are working with prominent thought leaders who are providing a rapid transfer of best-practice for establishing EXPAREL-based protocols as the new standard
of care.

Third Molar (Wisdom Tooth) Procedures

Third molar (wisdom tooth) extractions are among the most common dental procedures in the U.S. and are performed in up to 5 million patients every

year. Oral surgery, including third molar extraction, is associated with a defined period of pain and discomfort that traditionally leads to prescriptions for
opioids. A large retrospective review of the Medicaid database found that of 2.8 million patients who underwent surgical tooth extraction, 1.2 million—or
roughly 42 percent—filled a prescription for opioids within seven days after surgery, with a median of 120 morphine milligram equivalents dispensed per
patient. A study of the effect of EXPAREL on postoperative opioid prescribing after third molar extraction showed that patients who received EXPAREL were
prescribed significantly fewer opioids, including refills, compared to those who did not receive EXPAREL. The study, A Retrospective Cross-Sectional Study of
the Effect of Liposomal Bupivacaine on Postoperative Opioid Prescribing After Third Molar Extraction, was published in The Journal of Oral and
Maxillofacial Surgery in July 2021. In this retrospective analysis, researchers reviewed data from 600 patients who underwent third molar extractions between
2012 and 2018. De-identified data from 300 patients who received EXPAREL were compared to data from 300 patients who did not receive an infiltration of
EXPAREL. Data from two outpatient oral surgery centers were included in this analysis. Patients in the EXPAREL treatment group received:

•

•

59 percent fewer opioids, including refills, compared to patients in the non-EXPAREL group (p<0.0001)

Fewer additional opioid prescriptions compared to the non-EXPAREL group (3.3% of patients required a refill vs. 7.7% of patients,
respectively)

In September 2017, we announced a collaboration with Aetna, one of the nation’s leading diversified health care benefits companies, with the support of

the American Association of Oral and Maxillofacial Surgeons (AAOMS). This national program aims to reduce the number of opioid tablets dispensed to
patients undergoing impacted third molar extractions by at least 50 percent through the utilization of EXPAREL to provide prolonged non-opioid postsurgical
pain control. Aetna now includes the cost of EXPAREL as a covered expense for impacted third molar extractions performed by surgeons who have completed
training on use of the product.

In September 2022, we announced a joint initiative with Sevāredent Sourcing Solutions, or Sevāredent, a Group Purchasing Organization (GPO) that
creates a competitive advantage for like-minded dental organizations through vendor partnerships that drive supply chain value and efficiencies, to provide
expanded access to EXPAREL for patients undergoing oral and maxillofacial (OMFS) procedures ranging from third molar and full mouth extractions to
dentures and implants. This collaboration, which advances Sevāredent’s goal of improving patient outcomes and reducing exposure to opioids and their
associated risks, provides easy access to EXPAREL—including comprehensive product training and onboarding support from Pacira—for more than 1,800
dental offices across the U.S.

ZILRETTA Clinical Benefits

ZILRETTA combines a commonly administered steroid, TA, with a proprietary, extended-release microsphere technology to administer extended

therapeutic concentrations in the joint and persistent analgesic effect.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 11

Table of Contents

Based on the strength of its pivotal and other clinical trials, we believe that ZILRETTA represents an important treatment option for the millions of
patients in the U.S. in need of safe and effective extended relief from OA knee pain. The pivotal Phase 3 trial, on which the approval of ZILRETTA was based,
showed that ZILRETTA significantly reduced OA knee pain for 12 weeks, with some people experiencing pain relief through 16 weeks. Both the magnitude
and duration of pain relief provided by ZILRETTA in clinical trials were clinically meaningful with the magnitude of pain relief amongst the largest seen to
date in OA clinical trials. The overall frequency of treatment-related adverse events in these trials was similar to those observed with placebo, and no drug-
related serious adverse events were reported. We believe that ZILRETTA holds the potential to become the corticosteroid of choice given its safety and efficacy
profile, and the fact that it is the first and only extended-release corticosteroid on the market. In September 2021, the American Association of Orthopaedic
Surgeons, or AAOS, updated its evidence-based clinical practice guidelines, finding ZILRETTA can improve patient outcomes over traditional immediate-
release corticosteroids.

iovera° Clinical Benefits

There is a growing body of clinical data demonstrating success with iovera° treatment for OA of the knee. Surgical intervention is typically a last resort

for patients suffering from OA of the knee. In one study, the majority of the patients suffering from OA of the knee experienced pain relief up to 150 days after
being treated with iovera°.

Preliminary findings demonstrated reductions in opioids, including:

•

•

•

The daily morphine equivalent consumption in the per protocol group analysis was significantly lower at 72 hours (p<0.05), 6 weeks (p<0.05) and 12
weeks (p<0.05).

Patients who were administered iovera° were far less likely to take opioids six weeks after surgery. The number of patients taking opioids six weeks
after TKA in the control group was three times the number of patients taking opioids in the cryoanalgesia group (14 percent vs. 44 percent, p<0.01).

Patients in the iovera° group demonstrated a statistically significant reduction in pain scores from their baseline pain scores at 72 hours (p<0.05) and at
12 weeks (p<0.05).

We believe these data validate iovera° as a clinically meaningful non-opioid alternative for patients undergoing TKA, and that iovera° offers the

opportunity to provide patients with non-opioid pain control well in advance of any necessary surgical intervention through a number of key product attributes:

•

•

•

•

•

iovera° is safe and effective with immediate pain relief that can last for months as the nerve regenerates over time;

iovera° is repeatable;

The iovera° technology does not risk damage to the surrounding tissue;

iovera° is a convenient handheld device with a single-use procedure-specific Smart Tip; and

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

In September 2021, the AAOS updated its evidence-based clinical practice guidelines, reporting that denervation therapy—including cryoneurolysis—

may reduce knee pain and improve function in patients with symptomatic OA of the knee.

The Osteoarthritis Market

OA is the most common form of arthritis. It is also called degenerative joint disease and occurs most frequently in the hands, hips and knees. With OA,
the cartilage within a joint begins to break down and the underlying bone begins to change. These changes usually develop slowly and worsen over time. OA
can cause pain, stiffness and swelling. In some cases it also causes reduced function and disability—some people are no longer able to do daily tasks or work.
According to the CDC, OA affects over 32.5 million adults in the U.S.

The lifetime risk of developing symptomatic knee OA is 45 percent according to the Arthritis Foundation. The prevalence of symptomatic knee OA
increases with each decade of life, with the annual incidence of knee OA being highest between age 55 and 64 years old. There are 14 million individuals in the
U.S. who have symptomatic knee OA, and nearly two million are under the age of 45. Surgical intervention is typically a last resort for patients suffering from
OA of the knee.

With the addition of ZILRETTA to our product offering, we can now offer clinicians the flexibility to individualize OA knee pain treatment with either

ZILRETTA or a drug-free nerve block with iovera° based on patient factors and preference, physician training, site of care and reimbursement considerations.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 12

Table of Contents

Label and Global Expansion Activities

EXPAREL

•

•

•

Lower extremity nerve block. In September 2022, we announced positive topline results from two Phase 3 registration studies of EXPAREL as a
single-dose nerve block for postsurgical regional analgesia in lower extremity surgeries. The first study, which evaluated EXPAREL as a femoral
nerve block in the adductor canal in patients undergoing TKA achieved the primary endpoint, demonstrating a statistically significant reduction in
cumulative pain scores from 0 to 96 hours compared with bupivacaine HCl (p<0.01). EXPAREL also achieved a statistically significant reduction in
postsurgical opioid consumption through 96 hours (p<0.01) compared with bupivacaine HCl, a key secondary endpoint. The second study, which
evaluated EXPAREL as a sciatic nerve block in the popliteal fossa in patients undergoing bunionectomy, achieved the primary endpoint by
demonstrating a statistically significant reduction in cumulative pain scores from 0 to 96 hours compared with bupivacaine HCl (p<0.00001).
EXPAREL also achieved statistically significant reductions in postsurgical opioid consumption (p<0.00001) and percentage of opioid-free subjects
(p<0.001) through 96 hours compared with bupivacaine HCl, which were key secondary endpoints. EXPAREL was well tolerated with a safety profile
consistent with bupivacaine HCl. With these positive results, we submitted an sNDA to the FDA in January 2023 seeking expansion of the EXPAREL
label to include femoral nerve block in the adductor canal and sciatic nerve block in the popliteal fossa, with an anticipated FDA action date under
PDUFA in the second half of 2023.

Pediatrics. We expect to initiate a Phase 1 pharmacokinetic study after which we would initiate a registration study to support expansion of the
EXPAREL single-dose infiltration label to include patients under six years of age. If successful, we expect this study will support expansion of the
EXPAREL labels in the U.S. and E.U. We are also discussing our regulatory strategy for EXPAREL administered as a nerve block in the pediatric
setting.

Stellate ganglion block. Planning is underway for a multicenter registration study of EXPAREL as a stellate ganglion block for treating refractory
cardiac ventricular dysrhythmias and for use to prevent postoperative atrial fibrillation after open heart surgery. We are working with a steering
committee of Key Opinion Leaders, or KOLs, in regional anesthesia and stellate ganglion blocks to help finalize study design. After we meet with the
FDA to align on our regulatory strategy for expanding the EXPAREL label to include stellate ganglion block, we expect to proceed with a registration
trial. We believe a stellate ganglion block utilizing EXPAREL will last for several days and address a significant unmet need in patients with
ventricular and atrial dysrhythmias.

• Global expansion. We have prioritized the European and Latin American markets for global expansion. In Europe, EXPAREL is approved as a

brachial plexus block or femoral nerve block for treatment of post-operative pain in adults and as a field block for treatment of somatic post-operative
pain from small- to medium-sized surgical wounds in adults, and in November 2022, we received approval to include children aged 6 years or older as
a field block for treatment of somatic post-operative pain from small- to medium-sized surgical wounds. We launched EXPAREL in the U.K. and
targeted E.U. countries in the fourth quarter of 2021. In Latin America, we have a distribution agreement with Eurofarma Laboratories S.A., or
Eurofarma, for the development and commercialization of EXPAREL. Eurofarma has the exclusive right to market and distribute EXPAREL in 19
countries in Latin America, including Argentina, Brazil, Colombia and Mexico. In addition, Eurofarma will be responsible for regulatory filings for
EXPAREL in these countries, and recently submitted an application seeking approval in Brazil. We will receive royalties and are also eligible to
receive regulatory- and commercial-based milestone payments that are triggered by the achievement of certain events.

ZILRETTA

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

investigating ZILRETTA in shoulder OA in 2023. In addition, we are planning a Phase 4 study in patients with Type 2 diabetes. The shoulder study and the
diabetes study will both compare ZILRETTA to immediate release TA.

iovera°

In 2022, we launched a next-generation iovera° handheld device, which we believe is more efficient, easier to use and more durable. We are also
developing new iovera° Smart Tips for certain procedures and are developing a specific tip for a medial branch block for treating chronic low-back pain, as
well as spine procedures. We are also seeking a label expansion for the

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 13

Table of Contents

treatment of spasticity, which we believe is a significant long-term opportunity for iovera°. Additionally, we began selling iovera° in the E.U. through a
contracted sales force in 2022.

Clinical Development Programs

PCRX-201

PCRX-201 was added to our portfolio as part of the Flexion Acquisition. PCRX-201 is a novel, IA gene therapy product candidate that produces the anti-
inflammatory protein, IL-1Ra, for treating OA pain in the knee. Based upon compelling initial Phase 1 efficacy and safety data for PCRX-201, we are working
with investigators and plan to request an FDA meeting to discuss the regulatory pathway forward for OA of the knee, as well as an RMAT designation.

pMVL-Based Clinical Programs

Given the proven safety, flexibility and customizability of our pMVL drug delivery technology platform for acute, sub-acute and chronic pain

applications, we have several pMVL-based products in clinical development. Following data readouts from preclinical and feasibility studies for these
candidates, we have prioritized three programs for clinical development: (i) PCRX-401, a dexamethasone-pMVL for low back pain; (ii) PCRX-501, a high
potency bupivacaine-pMVL for longer-lasting pain relief (20.0 mg/mL) and (iii) EXPAREL for intrathecal analgesia (13.3 mg/mL). We are planning to initiate
the second half of our Phase 1 study of EXPAREL for intrathecal analgesia in the first half of 2023.

PCRX-301

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

V

development of PCRX-301 was intended to support administration as a peripheral analgesic lower extremity nerve block for management of post-operative
pain. In September 2022, based on the results of a completed phase 1 study, we decided to discontinue further development of PCRX-301 due to a lack of
clinical efficacy when compared to placebo and issues with the hydrogel formulation.

External Innovation

In parallel to our internal clinical programs, our business development team is pursuing innovative acquisition targets that are complementary to

EXPAREL, ZILRETTA and iovera° and are of great interest to the surgical and anesthesia audiences we are already calling on today. We are using a
combination of strategic investments, in-licensing and acquisition transactions to buildout a pipeline of innovation to improve patients’ journeys along the
neural pain pathway. The strategic investments we have made to support promising early stage platforms are summarized below:

Company

Development Stage

Description of Platform Technology

Potential Therapeutic
Areas

CarthroniX, Inc.

Phase 1-Ready

Genascence Corporation

Phase 1b-Ready

CX-011, a small molecule modulator of gp130 formulated as an intra-articular
injection designed to slow joint degeneration by mediating IL-6 cytokines

Adeno-associated virus (AAV) based gene therapy engineered to deliver
Interleukin-1 Receptor Antagonist (IL-1Ra) to target cells in joint(s)

Knee OA

Knee OA

GQ Bio Therapeutics GmbH

Preclinical

Spine BioPharma, LLC

Phase 3

Helper-dependent adenovirus (HDAd) based gene therapy engineered to deliver
DNA to target cells in joint(s) and intervertebral disc(s)

Knee OA and degenerative
disc disease (DDD)

SB-01, a 7-amino acid chain peptide that binds to and induces down regulation
of transforming growth factor, beta 1 (TGFβ1)

Degenerative disc disease
(DDD)

Sales and Marketing

We have built our sales and marketing organization to commercialize our products. Our primary target audiences are healthcare practitioners who
influence pain management decisions including anesthesiologists, surgeons, pharmacists and physician extenders (including physician assistants, nurse
practitioners and registered nurses).

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 14

Table of Contents

Our field team, consisting of sales representatives, account managers, scientific and medical affairs personnel and reimbursement and market access

professionals, executes on a full range of activities to broaden the use of our non-opioid products for pain management, including:

•

•

•

•

•

•

providing publications and abstracts showing clinical efficacy and safety, health outcomes and review articles;

working in tandem with hospital staff, such as anesthesiologists, surgeons, heads of quality, pharmacists, executives and registered nurses, to
provide access and resources for drug utilization or medication use evaluations and health outcomes studies, which provide retrospective and
prospective analyses for our hospital customers using their own hospital data to demonstrate the true cost of opioid-based postsurgical pain
control;

working with KOLs and advisory boards to address topics of best practice techniques as well as guidelines and protocols for the use of our
products, meeting the educational and training needs of our physician, surgeon, anesthesiologist, pharmacist and registered nurse customers;

undertaking education initiatives such as center of excellence programs; preceptorship programs; opioid-sparing and ERAS pain protocols and
predictive models for enhanced patient care; interactive discussion forums; patient education platforms leveraging public relations, advocacy
partnerships and public affairs efforts where appropriate; web-based training and virtual launch programs;

collaborating with healthcare providers towards improving the knowledge and management of pain in surgical and OA patients with a focus on
opioid risk and non-opioid alternatives and engaging our field-based medical teams in system-wide partnerships to address the national opioid
epidemic, with a goal of studying alternative postsurgical pain management options that focus on optimization and opioid alternative strategies;
and

facilitating reimbursement and the shift of procedures to hospital outpatient and ambulatory surgical center, or ASC, sites of care.

Pacira Training Facilities

We maintain and operate two training facilities—one in Tampa, Florida and one in Houston, Texas. These sites were constructed with a singular goal in

mind: to advance education on best practice techniques to effectively manage acute pain while reducing or eliminating the need for opioids. These facilities
provide clinicians with flexible, state-of-the-art environments for interactive, hands-on instruction on the latest and most innovative local, regional and field
block approaches for managing pain, improving patient care and enabling patient migration to the 23-hour stay environment.

Tampa, Florida

In October 2020, we opened the Pacira Innovation and Training, or PIT, Center of Tampa. We designed this facility to help advance clinician

understanding of the latest local, regional and field block approaches for managing pain. The PIT of Tampa provides an unparalleled training environment for
healthcare providers working to reduce or eliminate patient exposure to opioids. The PIT of Tampa supports a full range of educational events to advance
clinician understanding of the latest local, regional, and field block approaches for managing pain and reducing or eliminating exposure to opioids. Our
principal executive offices and corporate headquarters are also located at the PIT of Tampa.

The PIT of Tampa consists of approximately 13,000 square-feet of fully adaptable space and is equipped with state-of-the-art technology and audio/visual

capabilities and features several distinct training spaces including a simulation lab equipped with seven ultrasound scanning stations; a lecture hall featuring a
4½-foot tall by 24-foot wide liquid crystal display video wall to support live, virtual and even global presentations; and a green-screen broadcast studio
designed to livestream content with single or multiple hosts.

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

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

At no fee to the organization, the PIT of Tampa also serves as a venue for national anesthesia provider organizations to host their own workshops and

training sessions to educate healthcare providers.

Houston, Texas

In January 2023, we opened our second training facility, the Houston Pacira Innovation and Training Center, in Houston, Texas. This 19,000 square-foot

state-of-the-art facility features a 125-seat adaptive lecture hall featuring the same liquid crystal

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 15

Table of Contents

display video wall that the PIT of Tampa has, a broadcast studio and both wet and dry lab space for cadaver and other interactive workshops. A simulation lab
is equipped with eight advanced ultrasound machines equipped with artificial intelligence and 3-D training software in addition to professional medical lighting
and in-ceiling cameras. The PIT of Houston is core to developing both our physician champions and community-based clinicians who want to stay on the
forefront of opioid-sparing pain management. With this new training facility, we have doubled our capacity and ability to host programs for EXPAREL,
ZILRETTA and iovera°.

DePuy Synthes Sales Inc.

In July 2020, we announced the conclusion of a co-promotion agreement with DePuy Synthes Sales, Inc., or DePuy Synthes, part of the Johnson &
Johnson family of companies to market and promote the use of EXPAREL for orthopedic procedures in the U.S. market. The collaboration began in January
2017 and concluded in January 2021. During that time DePuy Synthes field representatives collaborated with the Pacira field teams to support EXPAREL use
and education in orthopedic surgical settings. In addition to partnering with DePuy Synthes in support of orthopedic surgical procedures, Pacira field
representatives remained the overall EXPAREL account managers and commercial leads for soft tissue surgeons, anesthesiologists and ASCs. Through this
collaboration we significantly expanded the use of EXPAREL and solidified its role in opioid-sparing protocols across a range of orthopedic procedures. Our
decision to conclude the partnership was due to the evolution of orthopedic practice from an inpatient hospital experience to the ambulatory setting with
anesthesia-driven regional approaches playing an increasingly essential role. This growing market is already served by our field-based teams.

Other Agreements

Flexion Acquisition

On November 19, 2021, we completed the Flexion Acquisition pursuant to an Agreement and Plan of Merger (the “Flexion Merger Agreement”), dated as

of October 11, 2021, by and among us, Oyster Acquisition Company Inc., a Delaware corporation and wholly owned subsidiary of Pacira (“Purchaser”), and
Flexion. Following the completion of a successful tender offer for the shares of Flexion’s common stock, Purchaser merged with and into Flexion with Flexion
surviving as a wholly owned subsidiary of Pacira. We changed the name of Flexion to Pacira Therapeutics, Inc. after completing the merger. As part of the
Flexion Acquisition, we acquired ZILRETTA, the first and only extended-release, IA (meaning in the joint) injection indicated for the management of OA knee
pain. ZILRETTA is a non-opioid therapy that employs a proprietary microsphere technology to provide pain relief. The addition of ZILRETTA to our
innovative non-opioid product portfolio directly aligns with our mission to provide an opioid alternative to as many patients as possible and address medical
needs along the neural pain pathway.

Initially, the total consideration for the Acquisition was approximately $578.8 million consisting of (i) $448.5 million of cash paid to Flexion shareholders

and to settle restricted stock units and certain stock options; (ii) an $85.1 million cash payment of Flexion debt not assumed by us and (iii) $45.2 million of
estimated fair value of contingent consideration related to contingent value rights that were issued to Flexion shareholders and certain equity award holders in
conjunction with the Flexion Acquisition. We funded the cash portion of the purchase price with cash on hand, and the consideration is subject to adjustments
based on the estimated fair value of the potential milestone payments. As of December 31, 2022, these contingent value rights could aggregate up to a total of
$372.3 million if certain regulatory and commercial milestones are met. For more information, see Note 5, Flexion Acquisition and Note 12, Financial
Instruments, to our consolidated financial statements included herein.

MyoScience Acquisition

In April 2019, we completed the MyoScience Acquisition. The total consideration included an initial cash payment of $120.0 million, reduced by $1.0

million for post-closing purchase price adjustments and indemnification obligations, plus contingent milestone payments up to an aggregate of $100.0 million
of which $43.0 million is available at December 31, 2022. The expiration date for the achievement of the milestones is December 31, 2023. We changed the
name of MyoScience to Pacira CryoTech, Inc. after completing the merger. For more information on the contingent consideration related to the MyoScience
Acquisition, refer to Note 12, Financial Instruments, to our consolidated financial statements included herein.

Research Development Foundation

Pursuant to an agreement with the Research Development Foundation, or RDF, we were required to pay RDF a low single-digit royalty on the collection of

revenues from certain products for as long as certain patents assigned to us under the

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 16

Table of Contents

agreement remain valid. RDF has the right to terminate the agreement for an uncured material breach by us, in connection with our bankruptcy or insolvency or
if we directly or indirectly oppose or dispute the validity of the assigned patent rights.

Our U.S. Patent No. 11,033,495 issued on June 15, 2021. Thereafter, RDF asserted that the issuance of that patent extends our royalty obligations under the

agreement until 2041. We disagreed and explained that the royalty period under the agreement ended on December 24, 2021 with the expiration of our U.S.
Patent No. 9,585,838. Because of the disagreement over the interpretation of this agreement, in December 2021, we filed a declaratory judgment lawsuit in the
U.S. District Court for the District of Nevada (21-cv-02241). The lawsuit seeks a declaration from the court that we owe no royalties to RDF with respect to our
EXPAREL product after December 24, 2021. During the pendency of the lawsuit, we will continue to pay royalties to RDF under protest, however, we are
unable to predict the outcome of this action at this time.

Aratana Therapeutics, Inc.

In December 2012, we entered into an Exclusive License, Development and Commercialization Agreement and related Supply Agreement with Aratana

Therapeutics, Inc., a wholly owned subsidiary of Elanco Animal Health, Inc., or Aratana. Under the agreements, we granted Aratana an exclusive royalty-
bearing license, including the limited right to grant sublicenses, for the development and commercialization of our bupivacaine liposome injectable suspension
product for use in animals. In August 2016, the FDA’s Center for Veterinary Medicine, or CVM, approved NOCITA  (bupivacaine liposome injectable
suspension), as a local post-operative analgesia for cranial cruciate ligament surgery in dogs (NOCITA is a registered trademark of Aratana). In August 2018,
the CVM expanded the NOCITA label to include its use as a peripheral nerve block to provide regional postoperative analgesia following onychectomy in cats.
In June 2019, the CVM approved a 10mL vial size for NOCITA. Aratana began purchasing our bupivacaine liposome injectable suspension product in 2016.

®

We are eligible to receive up to $40.0 million upon the achievement of commercial milestones. Aratana is required to pay us a tiered double-digit royalty
on certain net sales made in the U.S. If the product is approved by foreign regulatory agencies for sale outside of the U.S., Aratana will be required to pay us a
tiered double-digit royalty on such net sales. Royalty rates will be reduced by a certain percentage upon the entry of a generic competitor for animal health
indications into certain jurisdictions or if Aratana must pay royalties to third parties under certain circumstances.

Either party has the right to terminate the license agreement in connection with (i) an insolvency event involving the other party that is not discharged in a
specified period of time; (ii) a material breach of the agreement by the other party that remains uncured for a specified cure period or (iii) the failure to achieve
a minimum annual revenue as set forth in the agreement, all on specified notice. We may terminate the agreement in connection with (i) Aratana’s failure to pay
any amounts due under the agreement; (ii) Aratana’s failure to achieve regulatory approval in a particular jurisdiction with respect to such jurisdiction or
(iii) Aratana’s failure to achieve its first commercial sale within a certain amount of time on a country by country basis after receiving regulatory approval, all
on specified notice. Aratana may terminate the license agreement (i) upon the entry of a generic competitor for animal health indications on a country by
country basis or (ii) at any time on a country by country basis except with respect to the U.S. and any country in the E.U., all on specified notice. The parties
may also terminate the license agreement by mutual consent. The license agreement will terminate automatically if we terminate the supply agreement. In the
event that the license agreement is terminated, all rights to the product (on a jurisdiction by jurisdiction basis) will be terminated and returned to us. Unless
terminated earlier pursuant to its terms, the license agreement is effective until July 2033, after which Aratana has the option to extend the agreement for an
additional five-year term, subject to certain requirements.

Eurofarma Laboratories S.A.

In June 2021, we entered into a distribution agreement with Eurofarma for the development and commercialization of EXPAREL in Latin America.
Under the terms of the agreement, Eurofarma obtained the exclusive right to market and distribute EXPAREL in 19 countries in Latin America, including
Argentina, Brazil, Colombia, and Mexico. Eurofarma recently submitted an application seeking approval in Brazil. In addition, Eurofarma is responsible for
regulatory filings for EXPAREL in these countries. We will receive royalties based on Eurofarma’s future commercialization of EXPAREL and are also eligible
to receive milestone payments that are triggered by the achievement of certain regulatory and commercial events.

Verve Medical Products, Inc.

In July 2021, we entered into a licensing agreement with Verve Medical Products, Inc. for the distribution of iovera° in Canada. We began selling iovera°

in Canada in the fourth quarter of 2021.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 17

Table of Contents

Significant Customers

We had three wholesalers each comprising 10 percent or more of our total revenue for the year ended December 31, 2022: Cardinal Health, Inc.,
McKesson Drug Company and AmerisourceBergen Health Corporation, which accounted for 31%, 23% and 22% of our total revenues, respectively. These
wholesalers process orders for EXPAREL under a drop-ship program. EXPAREL is delivered directly to end-users without the wholesalers ever taking physical
possession of the product. None of our customers of ZILRETTA or iovera° accounted for 10 percent or more of our total revenue for the year ended
December 31, 2022.

Manufacturing and Research Facilities

Internal Facilities

We manufacture EXPAREL and iovera° handpieces at our facility in San Diego, California. We also have a mixed-use research and development,
manufacturing and office facility which sits adjacent to our EXPAREL and iovera° manufacturing facility, and a warehouse located within five miles of these
facilities. We refer to these three buildings as the Science Center Campus, and together they consist of approximately 195,000 square feet. Our manufacturing
facilities are inspected regularly and approved by the FDA, EMA, MHRA and the Environmental Protection Agency (EPA).

We purchase raw materials and components from third-party suppliers to manufacture EXPAREL, ZILRETTA and iovera°. In most instances, alternative
sources of supply are available, although switching to an alternative source would, in some instances, take time and could lead to delays in manufacturing our
product candidates. Suppliers may not sell these raw materials to us at the times that we need them or on commercially reasonable terms and we do not have
direct control over the availability of these raw materials from our suppliers. In order to manage the risk related to raw material shortages, we strive to keep
adequate supplies of key raw materials on hand and qualify additional sources of supply as appropriate.

All manufacturing of products, initial product release and stability testing are conducted by us and our manufacturing partners in accordance with Current

Good Manufacturing Practices, or CGMP.

Our EXPAREL manufacturing facility at the Science Center Campus is an approximately 84,000 square foot structure located on a five-acre site. It was
custom built as a pharmaceutical research and development and manufacturing facility. Activities in this facility include the manufacture of EXPAREL bulk
product on dedicated production lines and its fill/finish into vials, microbiological and quality control testing, product storage, development of analytical
methods and manufacturing of development products. We are expanding our EXPAREL manufacturing capacity at our Science Center Campus as we expect
the demand for EXPAREL will increase.

Our 90,000 square-foot mixed-use research and development, manufacturing and office facility is located adjacent to our EXPAREL manufacturing
facility and was completely renovated in 2020 to meet our specifications. We manufacture all of the iovera° handpieces at this facility. This building also
houses our Science Center related research and development activities and general and administrative functions, as it includes both laboratories and the
building infrastructure necessary to support the formulation, analytical testing, clinical and process development activities for manufacturing additional
commercial product indications and new pipeline products. Our pilot plant suite for early stage clinical product production is located in this building and there
is additional space for future expansion opportunities.

We also have an approximately 21,000 square foot warehouse that serves as the main CGMP warehouse for our Science Center Campus operations,
primarily being used for the storage of production materials. It contains ambient as well as cold temperature CGMP warehouse storage and also features a
quality control clean room for sampling incoming materials.

Distribution of our pMVL products, including EXPAREL, requires cold-chain distribution, whereby a product must be maintained between specified

temperatures. We have validated processes for continuous monitoring of temperature from manufacturing through delivery to the end-users.

Co-Production Facilities

Thermo Fisher Scientific Pharma Services

In April 2014, we and Thermo Fisher entered into a Strategic Co-Production Agreement, Technical Transfer and Service Agreement and Manufacturing

and Supply Agreement (the “EXPAREL Manufacturing and Supply Agreement”) to collaborate in the manufacture of EXPAREL. Thermo Fisher undertook
certain technical transfer activities and construction services

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 18

Table of Contents

needed to prepare Thermo Fisher’s Swindon, England facility for the manufacture of EXPAREL in two dedicated suites. We provided Thermo Fisher with the
equipment necessary to manufacture EXPAREL and pay fees to Thermo Fisher based on Thermo Fisher’s achievement of certain technical transfer and
construction milestones. We also reimburse Thermo Fisher for certain nominal expenses and additional services. In February 2019, we announced that
commercial production of EXPAREL was underway at the first Thermo Fisher suite. We are now using a second, larger-scale dedicated suite that has more than
doubled our EXPAREL manufacturing capacity at the Thermo Fisher site. We began commercial production of EXPAREL out of that second suite in August
2021.

The initial term of the EXPAREL Manufacturing and Supply Agreement is 10 years from the date of FDA approval of the first manufacturing suite,
which was received in May 2018. We pay fees to Thermo Fisher for their operation of the manufacturing suites and the amount of EXPAREL produced by
Thermo Fisher. We also reimburse Thermo Fisher for purchases made on our behalf, certain nominal expenses and additional services. We may terminate this
agreement upon one month’s notice if a regulatory authority causes the withdrawal of EXPAREL from the U.S. or any other market that represents 80 percent
of our overall sales, or at any time for convenience by providing between 18 and 24 months’ notice (depending on the number of years after the FDA approval
date). Either party may terminate the EXPAREL Manufacturing and Supply Agreement in the event of the breach or bankruptcy of the other party.

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 our 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. We make monthly payments to Thermo Fisher for such activities and reimburse Thermo Fisher
for certain material, equipment and miscellaneous expenses and additional services.

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

pay 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. We also reimburse Thermo Fisher for purchases of materials and equipment made on our behalf, certain nominal expenses and
additional services. The ZILRETTA Manufacturing and Supply Agreement will remain in full effect unless and until it expires or is terminated. We may
terminate this agreement upon one month’s notice if a regulatory authority causes the withdrawal of ZILRETTA from the U.S. or any other market that
represents 80 percent of our overall sales, or at any time for convenience by providing 24 months’ notice. Either party may terminate the ZILRETTA
Manufacturing and Supply Agreement in the event of the breach or bankruptcy of the other party. Upon termination of the ZILRETTA Manufacturing
Agreement (other than termination by us in the event that Thermo Fisher does not meet the manufacturing milestones or for a breach by Thermo Fisher), we
will be obligated to pay for the costs incurred by Thermo Fisher associated with the removal of our manufacturing equipment and for Thermo Fisher’s
termination costs up to a specified capped amount.

Carlisle Companies, Inc.

In January 2020, we and Carlisle Companies, Inc., or Carlisle, (formerly Providien Device Assembly, LLC) entered into a Manufacturing and Supply
Agreement (the “Carlisle Agreement”) to collaborate in the manufacture of iovera° Smart Tips at Carlisle’s Tijuana, Mexico facility. The initial term of the
Carlisle Agreement is five years. Under the Carlisle Agreement, we pay fees based on the amount of iovera° Smart Tips delivered by Carlisle. Since April
2022, all iovera° Smart Tips are now produced by Carlisle.

The Carlisle Agreement may be terminated by either party upon one years’ written notice without cause. We may terminate the Carlisle Agreement upon
thirty days’ written notice in the event that iovera° is withdrawn from the market or no longer sold by us. Either party may terminate the Carlisle Agreement in
the event of the breach or bankruptcy of the other party.

Intellectual Property and Exclusivity

We seek to protect our products, our product candidates and our technologies through a combination of patents, trade secrets, proprietary know-how,
regulatory exclusivity and contractual restrictions on disclosure. We note that the patents and applications described below are only examples intended to
highlight the variety of coverage provided by our existing and constantly developing portfolio.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 19

Table of Contents

Patents and Patent Applications

We seek to protect the proprietary position of our products and product candidates by, among other methods, filing U.S. and foreign patent applications

related to our proprietary technology, inventions and improvements that are important to the development of our business. As of December 31, 2022, there are
over 13 families of patents and patent applications relating to various aspects of the pMVL drug delivery technology and 29 families of patents and patent
applications relating to various aspects of the technology used by iovera°. There is one family of patents and patent applications relating to various aspects of
the technology used by ZILRETTA. Patents have been issued in numerous countries, with an emphasis on the North American, European and Japanese
markets. These utility patents generally have a term of 20 years from the date of the non-provisional filing unless claiming priority to an earlier filed non-
provisional application. Some of our expired U.S. patents had a term of 17 years from the grant date. Our issued patents expire at various dates in the future, as
discussed below, with the last currently issued patent for the pMVL drug delivery technology expiring in 2041, the last currently issued patent for ZILRETTA
expiring in 2031 and the last currently issued utility patent for the iovera° technology expiring in 2040.

Patents and Patent Applications for our pMVL and pMVL Products

In June 2021, the United States Patent and Trademark Office, or USPTO, issued U.S. Patent No. 11,033,495 related to EXPAREL. The patent,

“Manufacturing of Bupivacaine Multivesicular Liposomes,” claims composition of EXPAREL prepared by the improved manufacturing process. In November
2021, the USPTO issued U.S. Patent Nos. 11,185,506 and 11,179,336, claiming the improved EXPAREL manufacturing process and EXPAREL composition,
respectively. Six U.S. patents relating to product and product-by-process in connection with the improved manufacturing process for EXPAREL were issued
between March and September 2022, providing additional patent protection through 2041. In March 2022, the USPTO issued U.S. Patent No. 11,278,494,
claiming EXPAREL composition. In April 2022, the USPTO issued U.S. Patent Nos. 11,304,904 and 11,311,486, claiming composition of EXPAREL prepared
by the improved manufacturing process and EXPAREL composition, respectively. In June 2022, the USPTO issued U.S. Patent No. 11,357,727, claiming
composition of EXPAREL prepared by the improved manufacturing process. In August 2022, the USPTO issued U.S. Patent No. 11,426,348, claiming
EXPAREL batch compositions. In September 2022, the USPTO issued U.S. Patent No. 11,452,691, claiming EXPAREL batch compositions.

All eight of the patents issued in 2021 and 2022 will have an expiration date of January 22, 2041. U.S. Patent Nos. 11,033,495, 11,179,336, 11,278,494,

11,304,904, 11,311,486, 11,357,727, 11426,348 and 11,452,691 are currently listed in the FDA’s “Approved Drug Products with Therapeutic Equivalence
Evaluations” (the “Orange Book”). Additionally, we recently received a Notice of Allowance from the USPTO for one EXPAREL patent that has been
examined and will issue in due course in 2023. After issuance, we will submit this patent for listing in the Orange Book. After listing, the Orange Book would
have a total of nine EXPAREL patents each with an expiration date of January 22, 2041.

We also own a family of U.S. and foreign patents on an alternative process to manufacture EXPAREL and other pMVL-based products. The process

offers many advantages, including larger scale production and lower manufacturing costs. There are eight issued U.S. patents. Patents that claim the process
and apparatus will expire at the latest in November 2033. One of the patents claims a product made by the process and expires in April 2031. As of December
31, 2022, we have four granted patents in China, one granted patent in Europe, one granted patent in Japan and one granted patent in Israel, protecting various
aspects of the alternative process, including the methods of using the apparatus and the apparatus itself.

In February 2022, we filed a provisional application relating to the use of EXPAREL as stellate ganglion blocks for managing cardiac arrhythmia,
including electrical storm. In October 2022, we filed a U.S. and a Patent Cooperation Treaty, or PCT, application relating to compositions of matter, processes
of making and method of treatment in connection with dexamethasone sodium phosphate-pMVL product. In addition, we also filed a U.S. and a PCT
application were filed relating to compositions of matter, processes of making and method of treatment in connection with a high-potency bupivacaine-pMVL
product.

Patents and Patent Applications for ZILRETTA

A composition of matter patent has been issued by the USPTO for ZILRETTA, with a patent term into 2031. The USPTO has also issued two patents

directed at the methods of manufacturing and using ZILRETTA with patent terms into 2031. Considerable expertise and effort were required to carry out the
large body of original work underlying the formulation of ZILRETTA, including experimenting with, and observing the effects of over 50 steroid and poly
lactic-co-glycolic acid, or PLGA, formulations. We believe our extensive know-how and trade secrets relating to the manufacturing process for ZILRETTA,
including those that relate to precise pharmaceutical release profiles, represent a meaningful entry barrier.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 20

Table of Contents

We own three U.S. ZILRETTA patents as well as counterpart foreign patents and patent applications covering composition of matter, methods of
manufacture, and methods of use. Our U.S. ZILRETTA patents have expiration dates in 2031. The ZILRETTA composition of matter invention is the result of
several unique discoveries relating to a narrow drug load specification, a certain release profile of polymers, specific polymer weights and ratios, and clinical
efficacy observed within a dose-range. The U.S. patents directed to ZILRETTA’s composition of matter and methods of use are listed in the FDA Orange Book.
We also have two U.S. patents directed at compositions of matter similar to ZILRETTA, as well as methods of making and using the same, with patent terms
into 2031.

In 2022, we had one patent granted in Pakistan, further expanding our global intellectual property portfolio, which includes patents in the U.S., Australia,
Canada, China, Europe, Hong Kong, Indonesia, India, Israel, Japan, Malaysia, Mexico, New Zealand, Pakistan, the Philippines, the Russian Federation, Saudi
Arabia, Singapore, South Africa, South Korea, Taiwan and Ukraine. These foreign patents cover the composition of matter, methods of manufacturing, and
methods of using ZILRETTA and are similar in scope to the protection in the U.S. described above.

We have also in-licensed intellectual property, owned by the Southwest Research Institute, or SwRI, which gives us exclusive rights to SwRI patents

covering our proprietary microsphere manufacturing technology used in the production of ZILRETTA. These patents are scheduled to expire in 2025.

Patents and Patent Applications for iovera°

Issued patents in the U.S. afford us a wide range of coverage of various aspects of the iovera° technology. For example, several of our earliest filed

patents cover the structural aspects of a handheld cryogenic device with single needle and needle arrays, tissue-penetrating needle probes that may be
detachable, fused silica tubing fluid delivery paths, methods of applying cryotherapy using the cryogenic device and methods for using replaceable needle
probes. These patents are set to expire between 2025 and 2032. An important patent family specifically directed to systems and methods of treating pain offers
both broad and variable coverage of cryogenic device features and methods of using the same for pain management, including single-use needle probes,
particular needle sizes and shapes. Patents in this family are set to expire between 2025 and 2028. Another important patent family has broad disclosure and
coverage of a variety of indications for treatment by cryogenic devices, including joint function and stiffness, OA, occipital neuralgia, spasticity, neuroma and
other nerve entrapment indications and is set to expire between 2033 and 2037.

Additionally, there are several patents and pending patent applications directed to other important aspects of the iovera° technology. For example, patents

covering the probe filtration system are set to expire in 2033 and patents on the Smart Tip technology are set to expire between 2034 and 2037. Other patents
and applications cover methods of using needles with blunt tips and aspects of cryogenic devices coupled with a neurostimulator for locating nerves and are set
to expire between 2035 and 2038. There are eight new utility and design patent families covering now-commercial and developing next-generation technology,
which are issued or pending in the North American, European, Japanese, Chinese and Brazilian markets, which could potentially prevent others from using this
now-commercial next-generation cryogenic device until at least 2040 for utility patents and 2046 for design patents.

In addition, we also filed several provisional applications in 2022 covering the use of iovera° as stellate ganglion blocks for managing cardiac arrhythmia,

including electrical storm.

PCRX-201

In December 2017, Flexion acquired the global rights to PCRX-201 from GQ Bio Therapeutics GmbH (formerly named GeneQuine BioTherapeutics

GmbH), including a direct exclusive license of certain foundational patents, patent applications, and other proprietary rights owned by the Baylor College of
Medicine, or Baylor, that are related to PCRX-201 for human applications. These patents generally cover the composition of matter and method of use of
PCRX-201 in the treatment of OA. In 2019, the USPTO issued U.S. patent No. 10,301,647, which covers the composition of matter and method of use of
PCRX-201 in the treatment of OA with a term through January 2033. In addition, the Baylor patents related to PCRX-201 are issued in Europe, with an expiry
date in 2032, and in Australia, Canada, China, India, Japan and Eurasia with expiry dates in 2033. We are continuing to prosecute one U.S. Baylor patent
application related to PCRX-201. Further, we have entered the national phase in Brazil, China, Europe, Japan and the U.S. based on a PCT application covering
composition of matter and effective dosages of PCRX-201 in the treatment of OA in humans, which, if granted, are expected to provide protection until 2040.

We also have a U.S. application and a PCT application covering composition of matter and method of use of PCRX-201 for the treatment of degenerative

disc disease (DDD), which, if granted, are expected to provide protection until 2042.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 21

Table of Contents

Additional Intellectual Property

We have a PCT application covering composition of matter, method of use, and method of manufacture for formulations of an anesthetic drug of amino
amide group (lidocaine, bupivacaine and ropivacaine) formulated in a triblock copolymer component (one or more PLGA-polyethylene glycol-PLGA triblock
copolymers), which if converted and granted, is expected to provide protection until 2042.

Trade Secrets and Proprietary Information

Trade secrets play an important role in protecting our pMVL-based products (including EXPAREL) and pipeline, ZILRETTA and iovera° and provide

protection beyond patents and regulatory exclusivity. The scale-up and commercial manufacture of pMVL-based and iovera° products involve processes,
custom equipment and in-process and release analytical techniques that we believe are unique to us. The expertise and knowledge required to understand the
critical aspects of our pMVL manufacturing steps requires knowledge of both traditional and non-traditional emulsion processing and traditional
pharmaceutical production, overlaid with all of the challenges presented by aseptic manufacturing. ZILRETTA is also manufactured using custom equipment
and proprietary processes with respect to certain of the formulation and manufacturing techniques related to the TA-formulated PLGA microspheres in
ZILRETTA, including those that relate to its precise pharmaceutical release profile. The iovera° system relies on custom manufacturing techniques that are able
to provide the precision and tight tolerances required for a self-contained handheld cryogenic device. Additionally, the iovera° device includes proprietary
software for device operations during cryotherapy treatments.

We seek to protect our proprietary information, including our trade secrets and proprietary know-how, by requiring our employees, consultants and other

advisors to execute proprietary information and confidentiality agreements upon the commencement of their employment or engagement. These agreements
generally provide that all confidential information developed or made known during the course of the relationship with us be kept confidential and not be
disclosed to third parties except in specific circumstances. In the case of our employees, the agreements also typically provide that all inventions resulting from
work performed for us, utilizing our property or relating to our business and conceived or completed during employment shall be our exclusive property to the
extent permitted by law. Where appropriate, agreements we obtain with our consultants also typically contain similar assignment of invention obligations.
Further, we require confidentiality agreements from third parties that receive our confidential data or materials.

Competition

The pharmaceutical industry is intensely competitive and subject to rapid and significant technological change. Our competitors include organizations

such as major multinational pharmaceutical companies, established biotechnology companies, specialty pharmaceutical companies and generic drug
companies. Many of our competitors have greater financial and other resources than we have, such as more commercial resources, larger research and
development staffs and more extensive marketing and manufacturing organizations. As a result, these companies may obtain marketing approval more rapidly
than we are able and may be more effective in developing, selling and marketing their products. Smaller or early stage companies may also prove to be
significant competitors, particularly through collaborative arrangements with large, established companies.

EXPAREL

Our competitors may succeed in developing, acquiring or licensing on an exclusive basis technologies and drug products that are more effective or less

costly than EXPAREL or any other products that we are currently selling through partners or developing or that we may develop, which could render our
products obsolete and noncompetitive. We expect any products that we develop and commercialize to compete on the basis of, among other things, efficacy,
safety, convenience of administration and delivery, price and the availability of reimbursement from government and other third-party payers.

EXPAREL competes with well-established products with similar indications. Competing products available for postsurgical pain management include

opioids such as morphine, fentanyl, meperidine and hydromorphone, each of which is available generically from several manufacturers, and several of which
are available as proprietary products using novel delivery systems. Ketorolac, a non-steroidal anti-inflammatory drug, or NSAID, is also available generically
in the U.S. from several manufacturers, and Caldolor (ibuprofen for injection), an NSAID, has been approved by the FDA for pain management and fever in
adults. EXPAREL also competes with currently marketed non-opioid products such as bupivacaine, marcaine, ropivacaine and other anesthetics/analgesics, all
of which are also used in the treatment of postsurgical pain and are available as either oral tablets, injectable dosage forms or administered using novel delivery
systems. Additional products may be developed for the treatment of acute pain, including new injectable NSAIDs, novel opioids, new formulations of currently
available

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 22

Table of Contents

opioids and NSAIDs, long-acting local anesthetics and new chemical entities as well as alternative delivery forms of various opioids and NSAIDs. Currently
EXPAREL also competes with elastomeric pumps and catheter devices intended to provide bupivacaine over several days and with off-label combinations of
other approved analgesics, called “cocktails”, that are combined by compound pharmacies in an attempt to extend the duration of pain control.

ZILRETTA

Immediate-release steroids and HA injections are currently the two marketed classes of IA products that compete directly with ZILRETTA. Also available

are stem cell and PRP injections, but these require on-site preparation from tissue or blood taken from the patient and have generated questionable efficacy in
controlled clinical trials. Because these are minimally manipulated autologous therapies, they do not require and have not received FDA review or approval.
For that reason, they are generally not reimbursed by payers, and patients must pay out of pocket to receive these therapies. Furthermore, the American
Association of Hip & Knee Surgeons (AAHKS) issued a position statement indicating that it cannot recommend biologic therapies, including stem cell and
PRP injections, for the treatment of advanced hip or knee arthritis.

iovera°

The medical device industry is intensely competitive and subject to rapid and significant technological change. The cryotherapy pain management field in

particular is a growing industry due to increased attention on opioid usage for pain, which has created a rapidly emerging market and has fueled an increased
interest in opioid alternatives. Many of our competitors in our space have greater financial and other resources than we have, such as more commercial
resources, larger research and development staffs and more extensive marketing and manufacturing organizations. As a result, these companies may obtain
marketing approval more rapidly than we are able and may be more effective in developing, selling and marketing their products. The rise of various small and
early stage companies in the cryotherapy pain management field may also prove to be significant competitors, particularly if they enter into collaborative
arrangements with large, established companies.

Our competitors are continuously engaged in trials and attempts to develop new products or approaches in hopes of capturing the pain management
market. They may succeed in developing, acquiring or licensing on an exclusive basis, technologies that are more effective or less costly than the iovera°
system, which could render the iovera° system obsolete and noncompetitive. As a result, it is critical that we continue to innovate and to increase marketing
efforts in our primary markets. We expect any products that we develop and commercialize to compete on the basis of, among other things, efficacy, safety,
convenience of administration and delivery, price and the availability of reimbursement from government and other third-party payers.

Besides pharmaceutical products for pain management, iovera° competes with medical devices that ablate or degenerate peripheral nerves to treat
indications such as joint pain, neuralgia and OA pain. Competing products include cryotherapy devices as well as other devices such as cooled radio-frequency
ablation devices that block or degenerate peripheral nerves involved in conducting pain signals. Avanos Medical, Inc. markets these medical devices in the U.S.
Additional non-opioid products or entirely different approaches may also be developed for pain management by one or more of our competitors.

Government Regulation

In the U.S., prescription drug and medical device products are subject to extensive pre- and post-market regulation by the FDA, including regulations that

govern the research, development, testing, manufacturing, distribution, safety, efficacy, approval, labeling, storage, record keeping, reporting, advertising and
promotion of such products under the Federal Food, Drug and Cosmetic Act, or FDCA, and its implementing regulations. Outside the U.S., prescription drug
and medical device products are regulated by comparable agencies (including the EMA and MHRA in the E.U. and U.K., respectively, as well as authorities in
Canada and Latin America), laws and regulations. Failure to comply with applicable regulatory requirements may result in, among other things, refusal to
approve pending applications, withdrawal of an approval, warning letters, clinical holds, civil or criminal penalties, recall or seizure of products, injunction,
debarment, partial or total suspension of production or withdrawal of the product from the market. Any agency or judicial enforcement action could have a
material adverse effect on the Company.

Regulatory Environment

Pharmaceuticals

In the U.S., generally the FDA must approve any new drug, including a new use of a previously approved drug, before marketing of the drug occurs in the

U.S. This process generally involves:

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 23

Table of Contents

•

•

•

•

•

•

•

•

•

completion of preclinical laboratory and animal testing and formulation studies in compliance with the FDA’s Good Laboratory Practice
regulations;

submission to the FDA of an investigational new drug, or IND, application for human clinical testing, which must become effective before
human clinical trials may begin for unapproved use in the U.S.;

approval by an independent Institutional Review Board, or IRB, at each clinical trial site before each trial may be initiated;

performance of adequate and well-controlled human clinical trials in accordance with the FDA’s Good Clinical Practices, or GCP, to establish
the safety and efficacy of the proposed drug product for each intended use;

completion of process validation, quality product release and stability;

submission of a New Drug Application, or NDA, to the FDA;

satisfactory completion of an FDA pre-approval inspection of the product’s manufacturing facility or facilities to assess compliance with CGMP
requirements and to ensure that the facilities, methods and controls are adequate to preserve the drug’s identity, quality and purity;

satisfactory completion of an FDA advisory committee review, if applicable; and

review and approval by the FDA of the NDA.

The preclinical and clinical testing and approval process requires substantial time, effort and financial resources, and we cannot be certain that the FDA

will grant approvals for any of our product candidates on a timely basis, if at all. Preclinical tests include laboratory evaluation of product chemistry,
formulation and stability, as well as studies to evaluate toxicity in animals. The results of preclinical tests, together with manufacturing information, analytical
data and a proposed clinical trial protocol and other information, are submitted as part of an IND application to the FDA. The IND automatically becomes
effective 30 days after receipt by the FDA, unless the FDA places the trial on a clinical hold because of, among other things, concerns about the conduct of the
clinical trial or about exposure of human research subjects to unreasonable health risks. In such a case, the IND sponsor and the FDA must resolve any
outstanding concerns before the clinical trial can begin. Thus, submission of an IND does not by itself automatically result in FDA authorization to commence
a clinical trial. In addition, the FDA requires us to amend an existing IND for each successive clinical trial conducted during product development. Further, an
IRB covering each site proposing to conduct the clinical trial must review and approve the plan for any clinical trial along with informed consent information
for subjects before the clinical trial commences at that center. The IRB also must monitor the clinical trial until it is completed. The FDA, the IRB or the
sponsor may suspend a clinical trial at any time, on various grounds, including a finding that the subjects or patients are being exposed to an unacceptable
health risk. We may also suspend or terminate a clinical trial based on evolving business objectives and/or the competitive climate.

Clinical trials involve the administration of the product candidate to healthy volunteers or patients having the disease being studied under the supervision

of qualified investigators in accordance with GCP requirements, which include the requirement that all research subjects provide their informed consent for
their participation in any clinical trial. Sponsors of clinical trials generally must register at the National Institutes of Health (NIH)-maintained website
(www.clinicaltrials.gov) and report key findings and parameters. For purposes of an NDA submission and approval, typically, the conduct of human clinical
trials occurs in the following three pre-market sequential phases, which may overlap or be combined:

•

•

•

Phase 1: Sponsors initially conduct clinical trials in a limited population, either patients or healthy volunteers, to test the product candidate for
safety, dose tolerance, absorption, metabolism, distribution, excretion and clinical pharmacology, and, if possible, to gain early evidence of
effectiveness. In the cases of some products for severe or life-threatening diseases, especially when the product may be too inherently toxic to
ethically administer to healthy volunteers, the initial human testing often is conducted only on patients having the specific disease.

Phase 2: Sponsors conduct clinical trials generally in a limited patient population to identify possible adverse effects and safety risks, to
preliminarily evaluate the efficacy of the product for specific targeted indications and to determine dose tolerance, optimal dosage and dosing
schedule. Sponsors may conduct multiple Phase 2 clinical trials to obtain information prior to beginning larger and more extensive Phase 3
clinical trials.

Phase 3: These include expanded controlled and uncontrolled trials, including pivotal clinical trials. When Phase 2 evaluations suggest the
effectiveness of a dose range of the product and acceptability of such product’s safety profile, sponsors undertake Phase 3 clinical trials in larger
patient populations to obtain additional information needed to evaluate the overall benefit and risk balance of the drug and to provide an
adequate basis to develop labeling.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 24

Table of Contents

Some clinical trials may be overseen by an independent group of qualified experts organized by the clinical trial sponsor, known as a data safety
monitoring board or committee. This group provides authorization for whether or not a trial may move forward at designated check points based on access to
certain data from the trial. The process of completing clinical testing and obtaining FDA approval for a new drug is likely to take a number of years and
requires the expenditure of substantial resources. If an application is submitted, there can be no assurance that the FDA will review and approve the NDA. In
addition, sponsors may elect to conduct, or be required by the FDA to, conduct post-approval clinical trials to further assess the drug’s safety or effectiveness
after NDA approval, generate new data and best-practice administration techniques. Studies in an indication after approval are typically referred to as Phase 4
clinical trials.

The requirements for drug approval and the clinical trials that approvals are based on are similar in other countries, however each regulatory agency will
have differing policies, procedures and processes that we must comply with in each market we wish to sell our products in. There also can be no assurance that
approval or utilization of our products will be identical in different jurisdictions. For example, EXPAREL is approved in femoral nerve block for treatment of
post-operative pain in adults in Europe, but the FDA has not approved this indication in the U.S. However, based on positive results from our Phase 3 clinical
trials of EXPAREL as a femoral nerve block in lower extremity surgeries, we submitted an sNDA to the FDA in January 2023 seeking expansion of the
EXPAREL label to include femoral nerve block in the adductor canal and sciatic nerve block in the popliteal fossa, with an anticipated FDA action date under
PDUFA in the second half of 2023.

Medical Devices

In the U.S., the Medical Device Amendments of 1976 to the FDCA and its subsequent amendments regulate the design, manufacture and marketing of
medical devices. Medical devices that require notification submitted as a 510(k) clearance request must be reviewed and cleared by the FDA before we can
begin marketing them. To request 510(k) clearance, we must be able to demonstrate that the medical device is substantially equivalent to a previously cleared
and legally marketed 510(k) medical device. Medical devices require extensive clinical testing which consists of safety and efficacy studies, followed by pre-
market approval, or PMA, applications for specific surgical indications. The FDA’s Quality System Regulations, or QSRs, set forth standards for our product
design and manufacturing processes, require the maintenance of certain records and provide for inspections of our facilities by the FDA. There are also certain
requirements of state, local and foreign governments that must be complied with in the manufacture and marketing of our products. A new indication for 510(k)
clearance may or may not require a clinical trial. Expanding the iovera° label to include the treatment of spasticity requires a clinical trial, which we expect to
begin in 2023.

Review and Approval Process

Pharmaceuticals

Assuming successful completion of all required testing in accordance with all applicable regulatory requirements, sponsors submit the results of product
development, preclinical studies and clinical trials to the FDA as part of an NDA requesting approval to market the product for one or more indications. NDAs
must also contain extensive information relating to the product’s pharmacology, chemistry, manufacture, controls and proposed labeling, among other things. In
addition, 505(b)(2) applications must contain a patent certification for each patent listed in the FDA’s Orange Book that covers the drug referenced in the
application and upon which the third-party studies were conducted. For some drugs, regulatory agencies may require Risk Evaluation and Mitigation Strategies,
or REMS, which could include medication guides, physician communication plans or restrictions on distribution and use, such as limitations on who may
prescribe the drug or where it may be dispensed or administered. Currently, the FDA does not require a REMS for EXPAREL but the EMA and MHRA do.

If the FDA accepts a submission for substantive review, the FDA typically reviews the NDA in accordance with established timeframes. Under PDUFA,

the FDA establishes goals for NDA review time through a two-tiered classification system: Priority Review and Standard Review. A Priority Review
designation is given to drugs that address an unmet medical need by offering major advances in treatment or providing a treatment where no adequate therapy
currently exists. Standard Review applies to all applications that are not eligible for Priority Review. The FDA aims to complete Standard Reviews of NDAs
within 12 months of submission (ten months after the Day 60 filing date) and Priority Reviews within eight months of submission (six months after the Day 60
filing date). For an sNDA, the FDA aims to complete its Standard Review within 10 months of submission and Priority Reviews within six months of
submission. Review processes may sometimes extend beyond these target completion dates due to FDA requests for additional information or clarification,
difficulties scheduling an advisory committee meeting, negotiations regarding REMS or FDA workload issues, but in general under PDUFA the FDA is
supposed to complete its reviews within the target timeframes despite these factors. The FDA may refer the application to an advisory committee for review,
evaluation and recommendation as to the application’s approval. The recommendations of an advisory committee do not bind the FDA, but the FDA generally
follows such recommendations.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 25

Table of Contents

Under PDUFA, NDA applicants must pay significant NDA user fees upon submission. In addition, manufacturers of approved prescription drug

products must pay annual program fees, as we do for EXPAREL and ZILRETTA.

Before approving an NDA, the FDA will inspect the facility or facilities where the product is manufactured. The FDA will not approve an application

unless it determines that the manufacturing processes and facilities are in compliance with CGMP requirements and are adequate to ensure consistent
production of the product within required specifications. Additionally, the FDA will typically inspect one or more clinical sites to ensure compliance with GCP
before approving an NDA.

After the FDA evaluates the NDA and the manufacturing facilities, it may issue an approval letter or a Complete Response Letter, or CRL, to indicate

that the review cycle for an application is complete and that the application is not ready for approval. CRLs generally outline the deficiencies in the submission
and may require substantial additional testing or information in order for the FDA to reconsider the application. Even if such additional information is
submitted, the FDA may ultimately decide that the NDA does not satisfy the criteria for approval. Data from clinical trials are not always conclusive and the
FDA may interpret data differently than we do. If the FDA requires a REMS plan, it could include medication guides, physician communication plans or
elements to assure safe use, such as restricted distribution methods, patient registries and other risk minimization tools. The FDA also may approve an NDA
contingent on, among other things, changes to proposed labeling, a commitment to conduct one or more post-market studies or clinical trials and the correction
of identified manufacturing deficiencies, including the development of adequate controls and specifications. If and when the deficiencies have been addressed
to the FDA’s satisfaction, the FDA will typically issue an approval letter. An approval letter authorizes commercial marketing of the drug with specific
prescribing information for specific indications.

Outside the U.S., although timelines vary as do specific regulatory procedures, the same general principals hold, including the potential for a REMS plan

which could entail other requirements, including but not limited to patient registries and risk minimization tools.

Medical Devices

In the U.S., authorization to bring a medical device to market is generally obtained in one of two ways. The first pathway, a pre-market notification (the
510(k) process), requires demonstration that the new device is substantially equivalent to an already legally marketed medical device. The second pathway, a
PMA, requires an independent demonstration that a medical device is safe and effective for its intended use. In general, PMAs require a much longer time
horizon and can be much more expensive than obtaining clearance through the 510(k) process. A PMA must be submitted to the FDA if it is determined that
the device is not eligible for the 510(k) clearance process. A PMA must be supported by extensive data including, but not limited to, technical, preclinical and
clinical trials, manufacturing and labeling to demonstrate reasonable evidence of the device’s safety and efficacy to the FDA’s satisfaction.

To obtain 510(k) clearance, we must file with the FDA a pre-market notification demonstrating that our proposed device is substantially equivalent to a

previously cleared and legally marketed 510(k) device or a device that was in commercial distribution before May 28, 1976 for which the FDA has not yet
called for the submission of a PMA. 510(k) clearance for a predecessor device to iovera° was first obtained in March 2009 when the focus of MyoScience was
cosmetic applications (i.e. facial wrinkle reduction). MyoScience’s focus shifted to pain management in 2014, and since then there have been a number of
advancements that led to three additional 510(k) submissions and clearances to support iovera° and the subsequent growth of the iovera° product line.

After a device receives 510(k) clearance or a PMA approval, it may be changed or modified. Any modification that could significantly affect its safety or

effectiveness, or that would constitute a significant change in its intended use, will require a new clearance or approval. Regulations provide that the
manufacturer initially determines when a specific modification requires notification to FDA. The FDA has issued draft guidance that, if finalized and
implemented, will result in manufacturers needing to seek a significant number of new clearances for changes made to legally marketed devices. The FDA
reviews the manufacturer’s decision to file a 510(k) or PMA for modifications during facility audits.

Section 505(b)(2) New Drug Applications

For pharmaceutical products, as an alternate path to FDA approval, particularly for modifications to drug products previously approved by the FDA, an

applicant may submit an NDA under Section 505(b)(2) of the FDCA. Section 505(b)(2) was enacted as part of the Drug Price Competition and Patent Term
Restoration Act of 1984 (also known as the Hatch-Waxman Act), and permits the submission of an NDA where at least some of the information required for
approval comes from preclinical and/or clinical trials not conducted by or for the applicant. The FDA interprets Section 505(b)(2) of the FDCA to

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 26

Table of Contents

permit the applicant to rely upon the FDA’s previous findings of safety and effectiveness for an approved product. The FDA may also require companies to
perform additional clinical trials or measurements to support any change from the previously approved product. The FDA may then approve the new product
candidate for all or some of the label indications for which the referenced product has been approved, as well as for any new indication sought by the
Section 505(b)(2) applicant.

Applications under Section 505(b)(2) are subject to any non-patent exclusivity period applicable to the referenced product, which may delay approval of

the 505(b)(2) application even if the FDA has completed its substantive review and determined the drug should be approved. In addition, 505(b)(2) applications
must include patent certifications to any patents listed in the FDA’s Orange Book as covering the referenced product. If the 505(b)(2) applicant seeks to obtain
approval before the expiration of an applicable listed patent, the 505(b)(2) applicant must provide notice to the patent owner and NDA holder of the referenced
product. If the patent owner or NDA holder brings a patent infringement lawsuit within 45 days of such notice, the 505(b)(2) application cannot be approved
for 30 months or until the 505(b)(2) applicant prevails, whichever is sooner. If the 505(b)(2) applicant loses the patent infringement suit, the FDA may not
approve the 505(b)(2) application until the patent expires, plus any period of pediatric exclusivity.

In any future NDA submissions for our product candidates, we intend to follow the development and approval pathway permitted under the FDCA that

we believe will maximize the commercial opportunities for these product candidates.

Post-Approval Requirements

Pharmaceuticals

After approval, the NDA sponsor must comply with comprehensive requirements governing, among other things, drug listing, recordkeeping,

manufacturing, marketing activities, product sampling, distribution and annual reporting. Additionally, adverse events must be reported to the FDA in a timely
fashion, and pharmacovigilance programs to proactively look for adverse events are mandated by the FDA. An adverse event is any undesirable experience
associated with the use of a medical product in a patient. A serious adverse event is an adverse event that results in death, is life-threatening or results in
hospitalization or disability, among other things. If the events suggest a new safety signal for the drug in question, that could lead to the need for additional
safety statements in the labeling of the product or additional REMS. Additionally, adverse events found in other drugs could also mean that we have to abide by
additional safety measures and include warnings in our labeling. Similar reporting and pharmacovigilance obligations exist with regulatory agencies outside the
U.S.

If new safety issues are identified following approval, the FDA can require the NDA sponsor to revise the approved labeling to reflect the new safety

information; conduct post-market studies or clinical trials to assess the new safety information and implement a REMS program to mitigate newly identified
risks. The FDA may also require post-approval testing, including Phase 4 trials, and surveillance programs to monitor the effect of approved products which
have been commercialized, and the FDA has the authority to prevent or limit further marketing of a product based on the results of these post-marketing
programs. Drugs may be marketed only for approved indications and in accordance with the provisions of the FDA-approved label. Further, if we modify a
drug, including any changes in indications, labeling or manufacturing processes or facilities, the FDA may require us to submit and obtain FDA approval of a
new or supplemental NDA, which may require us to develop additional data or conduct additional preclinical studies and clinical trials.

In addition, drug manufacturers and other entities involved in the manufacture and distribution of approved drugs are required to register their

establishments with the FDA and state agencies and are subject to periodic unannounced inspections by the FDA and these state agencies for compliance with
CGMP requirements. Changes to the manufacturing process are strictly regulated and often require prior FDA approval before being implemented. FDA
regulations also require investigation and correction of any deviations from CGMP and impose reporting and documentation requirements upon us and any
third-party manufacturers that we may decide to use.

If after approval the FDA determines that the product does not meet applicable regulatory requirements or poses unacceptable safety risks, the FDA may

take other regulatory actions, including initiating suspension or withdrawal of the NDA approval. Later discovery of previously unknown problems with a
product, including adverse events of unanticipated severity or frequency, or with manufacturing processes, or failure to comply with regulatory requirements,
may result in, among other things:

•

•

restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;

fines, warning letters or holds on post-approval clinical trials;

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 27

Table of Contents

•

•

•

refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product license
approvals;

product seizure or detention, or refusal to permit the import or export of products; or

injunctions or the imposition of civil or criminal penalties.

The FDA strictly regulates marketing, labeling, advertising and promotion of products that are placed on the market. These regulations include standards

and restrictions for direct-to-consumer advertising, industry-sponsored scientific and educational activities, promotional activities involving the internet and
off-label promotion. While physicians may prescribe for off-label uses, manufacturers may only promote for the approved indications and in accordance with
the provisions of the approved label. The FDA has very broad enforcement authority under the FDCA, and failure to abide by these regulations can result in
penalties, including the issuance of a warning letter directing entities to correct deviations from FDA standards, a requirement that future advertising and
promotional materials be pre-cleared by the FDA, and state and federal civil and criminal investigations and prosecutions.

In addition, the distribution of prescription pharmaceutical products is subject to the Prescription Drug Marketing Act, or PDMA, which regulates the
distribution of drugs and drug samples at the federal level and sets minimum standards for the registration and regulation of drug distributors by the states. Both
the PDMA and state laws limit the distribution of prescription pharmaceutical product samples and impose requirements to ensure accountability in
distribution, including a drug pedigree which tracks the distribution of prescription drugs.

Medical Devices

The FDA has broad post‑market and regulatory obligations that we must adhere to. We are subject to unannounced inspections by the FDA to determine

our compliance with QSRs and other rules and regulations.

After a medical device is placed on the market, numerous regulatory requirements apply. These include, but are not limited to:

•

•

•

QSRs, which require manufacturers, including third‑party manufacturers, to follow stringent design, testing, documentation and other quality
assurance procedures during product design and throughout the manufacturing process;

Labeling regulations and FDA prohibitions against the promotion of products for uncleared, unapproved or off‑label uses; and

Medical device reporting regulations, which require that manufacturers report to the FDA if their device may have caused or contributed to a
death or serious injury or malfunctioned in a way that would likely cause or contribute to a death or serious injury if the malfunction were to
recur.

Failure to comply with regulatory requirements can result in enforcement action by the FDA, which may include any of the following sanctions:

•

•

•

•

•

•

•

restrictions on the marketing or manufacturing of the product, complete withdrawal of the product from the market or product recalls;

fines, warning letters or holds on post-approval clinical trials;

the potential withdrawal of 510(k) clearance or other approvals that were previously granted;

refusal of the FDA to approve pending applications or supplements to approved applications, or suspension or revocation of product license
approvals;

product seizure or detention, or refusal to permit the import or export of products;

injunctions or the imposition of civil or criminal penalties; or

requiring us to repair, replace and/or refund the cost of any medical device we have manufactured or distributed.

If any of these events were to occur, they could have a material adverse effect on our business.

International Regulation

In addition to regulations in the U.S., we are subject to a variety of foreign regulations governing clinical trials and the commercial sales and distribution
of our products. Whether or not we obtain FDA approval for a product, we must obtain approval by the comparable regulatory authorities of foreign countries
before we can commence clinical trials or marketing of

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 28

Table of Contents

the product in those countries. The approval process and requirements vary from country to country, and the time may be longer or shorter than that necessary
for FDA approval.

For example, in Europe, there are several tracks for marketing approval for pharmaceuticals, for product approval and post-approval regulatory processes,

depending on the type of product for which approval is sought. Under the centralized procedure, a company submits a single application to the EMA. The
marketing application is similar to the NDA in the U.S. and is evaluated by the CHMP, the expert scientific committee of the EMA. If the CHMP determines
that the marketing application fulfills the requirements for quality, safety and efficacy, it will submit a favorable opinion to the EC. The CHMP opinion is not
binding, but is typically adopted by the EC. A marketing application approved by the EC is valid in all E.U. member states and is recognized by the MHRA.
The centralized procedure is required for all biological products, orphan medicinal products and new treatments for neurodegenerative disorders, and it is
available for certain other products, including those which constitute a significant therapeutic, scientific or technical innovation.

As with FDA, EMA or MHRA approval, we may not be able to secure additional regulatory approvals in a timely manner, if at all. Additionally, as in the

U.S., post-approval regulatory requirements, such as those regarding product manufacture, marketing or distribution would apply to any product that is
approved in Europe, the U.K., Canada and Latin America, and failure to comply with such obligations could have a material adverse effect on our ability to
successfully commercialize any product.

In addition to regulations in Europe and the U.S., we will be subject to regulations governing clinical trials, product approvals, and commercial

distribution in the U.K, Canada, Latin America and any other jurisdictions in which EXPAREL, ZILRETTA, iovera° or any other future product is approved.

Third-Party Payer Coverage and Reimbursement

The commercial success of our products and product candidates will depend, in part, upon the availability of coverage and reimbursement from third-
party payers at the federal, state and private levels. Government payer programs, including Medicare and Medicaid, private health care insurance companies
and managed care plans may deny coverage or reimbursement for a product or therapy in whole or in part if they determine that the product or therapy is not
medically appropriate or necessary. Also, third-party payers have attempted to control costs by limiting coverage and the amount of reimbursement for
particular procedures, medical devices or drug treatments. The U.S. Congress and state legislatures from time to time propose and adopt initiatives aimed at
cost containment that could impact our ability to sell our products at a price level high enough to realize an appropriate return on our investment, which would
materially impact our results of operations.

In March 2010, President Obama signed into law the Patient Protection and Affordable Care Act, as amended by the Health Care and Education

Affordability Reconciliation Act (collectively, the “Affordable Care Act”), a sweeping law intended to broaden access to health insurance, reduce or constrain
the growth of healthcare spending, enhance remedies against fraud and abuse, add new transparency requirements for healthcare and health insurance
industries, impose new taxes and fees on the health industry and impose additional health policy reforms. The Affordable Care Act revised the definition of
“average manufacturer price” for reporting purposes, which could increase the amount of Medicaid drug rebates owed to states by pharmaceutical
manufacturers for covered outpatient drugs. The Affordable Care Act also established a new Medicare Part D coverage gap discount program, in which drug
manufacturers must agree to offer 50 percent point-of-sale discounts off negotiated prices of applicable brand name drugs to eligible beneficiaries during their
coverage gap period as a condition for the manufacturer’s outpatient drugs to be covered under Medicare Part D. Substantial new provisions affecting
compliance have also been enacted, which may require us to modify our business practices with healthcare practitioners. One such governmental program that
was expanded as part of the Affordable Care Act is the 340B Drug Pricing Program, which requires pharmaceutical manufacturers that participate in Medicaid
to enter into a pharmaceutical pricing agreement, or PPA, with the Secretary of Health and Human Services, and requires the manufacturer to extend discounts
to entities covered under the 340B Drug Pricing Program. The 340B Drug Pricing Program aims to cover entities that have scarce financial resources to be able
to reach the U.S.’s most financially vulnerable patient populations. There have been proposed in Congress a number of legislative initiatives regarding
healthcare, including possible repeal of the Affordable Care Act. At this time, it remains unclear whether there will be any changes made to the Affordable Care
Act. The full impact that the Affordable Care and other new laws will have on our business is uncertain. However, such laws appear likely to continue the
pressure on pharmaceutical pricing, especially under the Medicare program, and may also increase our regulatory burdens and operating costs. Moreover, in the
coming years, additional changes could be made to governmental healthcare programs that could significantly impact the success of our products.

In December 2022, as part of the Consolidated Appropriations Act of 2023, President Biden signed into law the Non-Opioids Prevent Addition in the

Nation, or NOPAIN, Act, a federal mandate that requires Medicare to reimburse for non-opioid

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 29

Table of Contents

products, such as EXPAREL, used during all surgeries conducted in the ASC or hospital outpatient department (HOPD) setting. Specifically, the NOPAIN Act
covers reimbursement for (i) all non-opioid medications indicated to reduce postoperative pain or produce postsurgical regional analgesia without acting upon
the body’s opioid receptors; and (ii) all devices used to deliver a therapy or reduce postoperative pain or produce postsurgical or regional analgesia. Any drug or
device that qualifies for reimbursement under the NOPAIN Act must have demonstrated the ability to reduce or avoid intraoperative opioid use or the quantity
of opioids prescribed in a clinical trial or through data published in a peer-reviewed journal. The Centers for Medicare and Medicaid Services (CMS) requires
time to implement the NOPAIN Act, which is currently expected to take effect beginning in January 2025.

The marketability of our products may suffer if the government and third-party payers fail to provide adequate coverage and reimbursement. In addition,

emphasis on managed care in the U.S. has increased, and we expect will continue to increase, the pressure on pharmaceutical and medical device pricing. Some
third-party payers require pre-approval of coverage for new or innovative devices or drug therapies before they will reimburse healthcare providers that use
such therapies, or place limits on the amount of reimbursement. Coverage policies and third-party payer reimbursement rates may change at any time. Even if
favorable coverage and reimbursement status is attained for our products, less favorable coverage policies and reimbursement rates may be implemented in the
future.

In international markets, reimbursement and healthcare payment systems vary significantly by country, and many countries have instituted price ceilings

on specific products and therapies. There can be no assurance that our products will be considered medically reasonable and necessary for a specific indication,
that our products will be considered cost-effective by third-party payers or that an adequate level of reimbursement will be available so that the third-party
payers’ reimbursement policies will not adversely affect our ability to sell our products profitably.

Marketing and Data Exclusivity

Market exclusivity provisions under the FDCA can delay the submission or approval of certain applications of other companies seeking to reference
another company’s NDA. The FDA may grant three or five years of marketing exclusivity in the U.S. for the approval of new or supplemental NDAs, including
Section 505(b)(2) NDAs, for, among other things, new indications, dosages or dosage forms of an existing drug, if new clinical investigations that were
conducted or sponsored by the applicant are essential to the approval of the application. A drug is a new chemical entity if the FDA has not previously
approved any other new drug containing the same active moiety, which is the molecule or ion responsible for the action of the drug substance. During the
exclusivity period, the FDA may not accept for review an Abbreviated New Drug Application, or ANDA, or a Section 505(b)(2) NDA submitted by another
company for another version of such drug where the applicant does not own or have a legal right of reference to all the data required for approval. However,
such an application may be submitted after four years if it contains a certification of patent invalidity or non-infringement to one of the patents listed with the
FDA by the innovator NDA holder. The FDCA also provides three years of marketing exclusivity for an NDA, or supplement to an existing NDA if new
clinical investigations, other than bioavailability studies, that were conducted or sponsored by the applicant are deemed by the FDA to be essential to the
approval of the application, for example new indications, dosages or strengths of an existing drug. Additionally, six months of marketing exclusivity in the U.S.
is available under Section 505A of the FDCA if, in response to a written request from the FDA, a sponsor submits and the agency accepts requested
information relating to the use of the approved drug in the pediatric population. This six-month pediatric exclusivity period is not a standalone exclusivity
period, but rather is added to any existing patent or non-patent exclusivity period for which the drug product is eligible. In the past, based on our clinical trial
program for EXPAREL, the FDA granted three years of marketing exclusivity to EXPAREL, which expired in October 2014. In Europe, manufacturers qualify
for 8 years of data exclusivity upon marketing authorization approval and an additional two years of market exclusivity, for a total of 10 years of regulatory
exclusivity.

Manufacturing Requirements

We must comply with the FDA’s CGMP requirements and comparable regulations in other countries. The CGMP provisions include requirements relating

to the organization of personnel, buildings and facilities, equipment, control of components and drug product containers and closures, production and process
controls, packaging and labeling controls, holding and distribution, laboratory controls, records and reports and returned or salvaged products. The
manufacturing facilities for our products must meet CGMP requirements to the satisfaction of the FDA and other authorities pursuant to a pre-approval
inspection before we can use them to manufacture our products. We and any third-party manufacturers we engage or with which we partner are also subject to
periodic inspections of facilities by the FDA and other authorities, including procedures and operations used in the testing and manufacture of our products to
assess our compliance with applicable regulations. Failure to comply with these and other statutory and regulatory requirements subjects a manufacturer to
possible legal or regulatory action, including warning letters, the seizure or recall of products, injunctions, consent decrees placing

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 30

Table of Contents

significant restrictions on or suspending manufacturing operations and civil and criminal penalties. Adverse experiences with the product or product complaints
must be reported and could result in the imposition of market restrictions through labeling changes or in product removal. Product approvals may be withdrawn
if compliance with regulatory requirements is not maintained or if problems concerning safety or efficacy of the product occur following approval.

Regulations Pertaining to Sales and Marketing

We are subject to various federal and state laws pertaining to health care “fraud and abuse,” including anti-kickback laws and false claims laws. Anti-

kickback laws generally prohibit a prescription drug or medical device manufacturer from soliciting, offering, receiving, or paying any remuneration to
generate business, including the purchase or prescription of a particular drug or device. Although the specific provisions of these laws vary, their scope is
generally broad and there may be no regulations, guidance or court decisions that clarify how the laws apply to particular industry practices. There is therefore
a possibility that our practices might be challenged under the anti-kickback or similar laws. False claims laws prohibit anyone from knowingly and willingly
presenting, or causing to be presented for payment to third-party payers (including Medicare and Medicaid) claims for reimbursed drugs, procedures or services
that are false or fraudulent, claims for items or services not provided as claimed, or claims for medically unnecessary items or services. Our activities relating to
the sale and marketing of our products may be subject to scrutiny under these laws. Violations of fraud and abuse laws may be punishable by criminal or civil
sanctions, including fines and civil monetary penalties and exclusion from federal health care programs (including Medicare and Medicaid). In the U.S., federal
and state authorities are paying increased attention to enforcement of these laws within the pharmaceutical and medical device industries and private
individuals have been active in alleging violations of the laws and bringing suits on behalf of the government under the federal civil False Claims Act. If we
were subject to allegations concerning, or were convicted of violating, these laws, our business could be harmed.

Laws and regulations have been enacted by the federal government and various states to regulate the sales and marketing practices of pharmaceutical and

medical device manufacturers. The laws and regulations generally limit financial interactions between manufacturers and health care providers or require
disclosure to the government and public of such interactions. The laws include the federal Physician Payment Sunshine Act, or “sunshine” provisions, enacted
in 2010 as part of the Affordable Care Act. The sunshine provisions apply to pharmaceutical and medical device manufacturers with products reimbursed under
certain government programs and require those manufacturers to disclose annually to the federal government (for re-disclosure to the public) certain payments
made to physicians and certain other healthcare practitioners or to teaching hospitals. State laws may also require disclosure of pharmaceutical and medical
device pricing information and marketing expenditures. Many of these laws and regulations contain ambiguous requirements. Given the lack of clarity in laws
and their implementation, our reporting actions could be subject to the penalty provisions of the pertinent federal and state laws and regulations. Outside the
U.S., other countries have implemented requirements for disclosure of financial interactions with healthcare providers and additional countries may consider or
implement such laws.

Regenerative Medicine Advanced Therapies

As part of the 21  Century Cures Act, Congress amended the FDCA to create the RMAT designation. The RMAT designation is intended to facilitate

st

efficient development and expedite review of regenerative medicine advanced therapies, which are intended to treat, modify, reverse, or cure a serious or life-
threatening disease or condition. RMAT covers cell therapies, gene therapies, therapeutic tissue engineering products, human cell and tissue products, and
combination products using any such therapies or products. A sponsor may request that the FDA designate a regenerative medicine advanced therapy
concurrently with or at any time after submission of an IND. For example, we intend to seek an RMAT designation from the FDA for PCRX-201. The FDA has
60 calendar days to determine whether the criteria are met, including whether there is preliminary clinical evidence indicating the potential to address unmet
medical needs for a serious or life-threatening disease or condition. A Biologics License Application (BLA) for a regenerative medicine advanced therapy may
be eligible for priority review or accelerated approval through surrogate or intermediate endpoints reasonably likely to predict long-term clinical benefit, or
reliance upon data obtained from a meaningful number of clinical trial sites. Benefits of such designation also include early interactions with the FDA to
discuss any potential surrogate or intermediate endpoint to be used to support accelerated approval. A regenerative medicine advanced therapy that is granted
accelerated approval and is subject to post-approval requirements may fulfill such requirements through the submission of clinical evidence, clinical studies,
patient registries, or other sources of real-world evidence, such as electronic health records; the collection of larger confirmatory data sets; or post-approval
monitoring of all patients treated with such therapy prior to its approval.

Healthcare Privacy and Security Laws

We may be subject to, or our marketing activities may be limited by, the Health Insurance Portability and Accountability Act, or HIPAA and its

implementing regulations, which established uniform standards for certain “covered entities” (healthcare

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 31

Table of Contents

providers, health plans and healthcare clearinghouses) governing the conduct of certain electronic healthcare transactions and protecting the security and
privacy of protected health information. The American Recovery and Reinvestment Act of 2009, commonly referred to as the economic stimulus package,
included sweeping expansion of HIPAA’s privacy and security standards called the Health Information Technology for Economic and Clinical Health Act, or
HITECH, which became effective in February 2010. Among other things, HITECH makes HIPAA’s privacy and security standards directly applicable to
“business associates”—independent contractors or agents of covered entities that receive or obtain protected health information in connection with providing a
service on behalf of a covered entity. HITECH also increased the civil and criminal penalties that may be imposed against covered entities, business associates
and possibly other persons, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce the federal
HIPAA laws and seek attorney’s fees and costs associated with pursuing federal civil actions.

Environmental Matters

Our research and development processes and our manufacturing processes involve the controlled use of hazardous materials and chemicals and produce

waste products, including pharmaceutical residues. We are subject to federal, state and local laws and regulations governing the use, manufacture, storage,
handling and disposal of hazardous materials and waste products, including those related to pharmaceutical residues. While we believe we are in compliance
with applicable environmental regulations, the failure to fully comply with any such regulations could result in the imposition of penalties, fines and/or
sanctions which could have a material adverse effect on our business. It is also possible that environmental issues may arise in the future which we cannot now
predict.

We are working towards improving our sustainable footprint through key practices like waste reduction, water recycling, and using energy efficient
equipment where possible. We have a focus on raising awareness and educating our employees on reducing our internal use of consumables and natural
resources. In addition, we have a broad range of recycling and waste management initiatives at our manufacturing facilities and corporate offices. For example,
at our internal manufacturing facilities we have addressed our use and recycling of paper products, aluminum cans, glass, electronics and plastic, as well as
responsible disposal of non-recyclables and effective water management.

Cybersecurity

We operate a risk-based cybersecurity program dedicated to protecting the confidentiality, integrity and availability of our information. We utilize a

layered approach in protecting against, and the detection of, cyber-attacks, and leverage outside partnerships to gain intelligence on threats and continue to
adjust our protection mechanisms to be effective. All employees receive information security training (including data protection and fraud awareness) on an
annual basis, and we use state-of-the-art technology to monitor systems for anomalous behavior. In the event an incident were to occur, a Security Incident
Response Team would be convened that consists of members from many functions, including legal counsel. Additionally, we carry a Cyber Insurance policy to
help cover investigation and mitigation expenses.

Although we have numerous controls to protect against common attacks, some attacks may still be effective. Our controls are designed to detect, triage

and eradicate these attacks. Over the past three years, there have been no known material breaches, and no expenses related to the investigation of such
breaches.

Corporate Citizenship

We are the industry leader in our commitment to non-opioid pain management and providing a non-opioid option to as many patients as possible to
redefine the role of opioids as a rescue therapy only. We are dedicated to the principles of social responsibility and good corporate governance. Our Board of
Directors is comprised of industry leaders with extensive and diverse experience spanning business and scientific leadership. We hold ourselves to the highest
standards and our Code of Business Conduct and Ethics reflects the business practices and principles of behavior that support this commitment. We are deeply
invested in the welfare of our patients and employees, the environment and the communities where we live and work. We conduct our operations and manage
our product and pipeline programs in a responsible manner and strive to comply with applicable laws, rules and regulations.

In 2021 and 2022, we provided support for charitable medical missions in Honduras, Ghana, Zambia, Guatemala, Ecuador, Mexico and India by donating
EXPAREL to help support surgeries for patients in need and have also supported the Louisiana State University Opioid Minimization Initiative as well as made
a commitment to donate EXPAREL to not-for-profit children’s hospitals each year over the next three years.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 32

Table of Contents

Human Capital

Pacira Core Values

We are a team of dedicated and highly talented professionals focused on driving improved patient outcomes with opioid-reducing strategies. We are an

organization built on high ethical standards, an unwavering commitment to patients and transparent communications. We have a drive and a desire to improve
the world around us and make a meaningful difference in the lives of patients, families, communities and society.

The six core values that underpin everything we do are:

• Patients: Their safety and welfare are our top priority at all times

• People: Our greatest asset

• Passion: We are passionate about what we do

• Think: Our thoughts are shared generously

• Trust: Building trust is essential

• Teamwork: The cornerstone of our business success

Corporate Sustainability Report

In January 2023, we published our inaugural Corporate Sustainability Report, or CSR, available on our corporate website. The CSR report contains

information about our people, our culture, patient and product safety, our commitment to our communities and opioid-sparing initiatives and our corporate
governance and ethics. The foregoing reference to our CSR report is not intended to, nor shall it be deemed to, incorporate information in the CSR report or any
other information contained on our corporate website into this Annual Report by reference.

Total Rewards

In order to attract and retain talent, we maintain broad-based benefits that are provided to all employees, including our 401(k) retirement plan with an

employer matching contribution made each pay period, employee stock purchase plan, flexible spending accounts, medical, dental and vision care plans,
healthcare and dependent care savings accounts, life insurance, short- and long-term disability policies, paid vacation, paid sick time and paid company
holidays. Additionally, we reward employees driving significant value creation with a variety of long-term and short-term incentives including a recognition
platform, annual performance bonuses, stock options, restricted stock units and a long-term performance cash incentive. We also offer our executives the
opportunity to participate in a deferred compensation plan with an employer match. We encourage our employees to give back in their communities and offer
one paid day off per year to volunteer. We regularly benchmark our rewards programs, adjusting as needed, to ensure our total rewards are competitive. We are
committed to paying all our employees a fair and living wage.

Talent Management

We invest significantly in our future leaders by cultivating their growth and development. We regularly assess and identify our emerging talent and
support their development with formal programs including classroom training, executive coaching, mentoring programs and “360-degree feedback” surveys
geared towards our high-potential leaders. Many of our leaders participating in these programs advance to higher level positions within the organization. We are
committed to soliciting employee feedback throughout their tenure with the organization, to shape organizational culture and to inform our people strategy. We
conduct new hire surveys to solicit feedback on employees’ initial experiences with us to help ensure a successful onboarding and accelerate their assimilation
into the organization and ability to contribute to our mission. We track turnover and employee engagement among other metrics, and conduct stay and exit
interviews to ensure our talent strategy serves our goal of attracting, developing and retaining top talent to serve as our future leaders and stewards of our
vision. In addition, we conduct mid-year and annual performance reviews for all employees to ensure regular discussions around performance, progress
towards goals and professional development. We offer targeted selection training for interviewers to ensure a consistent methodology applied in identifying and
hiring the best candidates for open positions and offer critical skills trainings in live and virtual settings, along with online courses available through our
learning platform, including management skills training for people managers, project management and communications training.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 33

Table of Contents

Employee Wellbeing, Health and Safety

Pacira is committed to the total wellbeing of our employees and their families. We offer a range of benefits designed to meet individual needs and help

employees and their families live healthy lives. This includes a variety of tools to promote total wellbeing in the areas of health, wealth, work and life to keep
our employees and their families healthy, lower their healthcare costs and reduce stress. For example, we provide access to free biometric screenings, an
employee assistance program, or EAP, and host in-person and webinar trainings on stress management and other EAP benefits, access to telemedicine including
mental health visits, a health advocate service to help employees and their families navigate the healthcare system, activity challenges and more. We offer our
eligible employees flexible work arrangements—including remote working opportunities, flexible schedules and reduced schedules to help achieve an
appropriate work/life balance. Benefits that protect financial wellbeing are also provided, including but not limited to: a paid parental leave benefit, insurance to
help protect assets during times of short- and long-term disability, life insurance and accidental death and dismemberment insurance, financial education
seminars on savings, debt and other financial topics, access to discounts on a variety of products and services and incentives to engage in a new or maintain a
wellbeing activity. In addition, we maintain a recognition program based on our core values, known as Celebrate, through which we recognize each other’s
commitment to making a meaningful difference for our patients and communities and create a shared culture where everyone is responsible for living up to and
sustaining our core values.

We have a formal Environmental Health and Safety (EHS) Program. It is our policy that everyone is entitled to a safe and healthful place to work. We

recognize that accident prevention, employee wellness and efficiency of operations are directly related to quality, production and cost. Pacira operates its
facilities in a manner that protects the health of its employees and minimizes the impact of its operations on the environment.

Diversity, Equity and Inclusion

We are committed to intentionally cultivating a culture of inclusion where all feel welcomed and valued for their backgrounds, perspectives and
experiences. We hold one another accountable to promote trust and transparency in support of our communities and collective purpose. In support of our
diversity, equity and inclusion vision, we have developed a strategy and multi-year roadmap, prioritizing education and training, and developed a global labor
and human rights policy. Our executive team and senior leaders have received Unconscious Bias and Inclusive Leadership training. We list our job postings on
state job banks and distribute them to community engaged veteran, minority, women and diversity organizations. We are committed to evaluating our people
processes to ensure we are attracting, developing, promoting and retaining diverse talent.

In 2018, we established P.O.W.E.R. (Preparing Our Women for Excellence and Results), an employee resource group open to all Pacira colleagues,
focused on promoting leadership values, fostering a community of support and the advancement of women through professional development and networking
opportunities. In 2020, we established a cross-functional diversity, equity and inclusion employee council to serve as an advisory board, comprised of
employees who lead, advocate for, inform and communicate our corporate diversity, equity and inclusion strategic initiatives around four key areas: leadership
development, diversity recruiting, culture and communications.

Employees

As of December 31, 2022, we had 715 employees, of which 713 are full-time and two are part-time. All of our employees are based in the U.S. except for

13 employees based in England. None of our employees are represented by a labor union, and we consider our current employee relations to be good.

Available Information

Our corporate website is located at www.pacira.com. We file reports and other information with the United States Securities and Exchange Commission,

or SEC, as required by the Exchange Act, which are accessible on the SEC’s website at www.sec.gov. We also make available free of charge through our
corporate website our Annual Report, quarterly reports on Form 10-Q, current reports on Form 8-K, proxy statements and any amendments to those reports
filed or furnished pursuant to Sections 13(a) and 15(d) of the Exchange Act. We make these reports available through our corporate website as soon as
reasonably practicable after we electronically file such reports with, or furnish such reports to, the SEC. In addition, we regularly use our corporate website to
post information regarding our business, product development programs and governance, and we encourage investors to use our website, particularly the
information in the sections entitled “Investors” and “News,” as a source of information about us. The foregoing references to our corporate website are not
intended to, nor shall they be deemed to, incorporate information on our corporate website into this Annual Report by reference, and the inclusion of our
website address in this Annual Report is an inactive textual reference only and is not intended to be an active link to our corporate website.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 34

Table of Contents

Item 1A.    Risk Factors

In addition to the other information in this Annual Report, any of the factors set forth below could significantly and negatively affect our business,
financial condition, results of operations or prospects. The trading price of our common stock may decline due to these risks. This section contains forward-
looking statements. You should refer to the explanation of the qualifications and limitations on forward-looking statements beginning on page 1 of this Annual
Report. These risk factors are not the only risks facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to
be immaterial also may materially adversely affect our business, financial condition or future results.

Risks Related to the Development and Commercialization of our Products and Product Candidates

Our success depends primarily on our ability to successfully commercialize EXPAREL and ZILRETTA.

We have invested a significant portion of our efforts and financial resources in the development and commercialization of our lead product, EXPAREL,

which was first approved by the FDA on October 28, 2011 and commercially launched in April 2012. EXPAREL was approved by the EC (which included the
U.K.) on November 16, 2020. During 2022, sales of EXPAREL accounted for 81% of our total revenue, and we expect EXPAREL sales will remain of primary
importance for the foreseeable future. We added ZILRETTA to our product portfolio upon completing the Flexion Acquisition in November 2021 and it
accounted for 16% of our total revenue in 2022. Our success primarily depends on our ability to continue to effectively commercialize EXPAREL and
ZILRETTA. Our ability to effectively generate revenues from EXPAREL and ZILRETTA will depend on our ability to, among other things:

•

•

•

create further market demand for EXPAREL and ZILRETTA through our marketing and sales activities and other arrangements established for
their promotion;

train, deploy and support a qualified sales force;

secure formulary approvals for EXPAREL at a substantial number of targeted hospitals and ASCs;

• manufacture EXPAREL and ZILRETTA in sufficient quantities in compliance with requirements of regulatory agencies and at acceptable quality

and pricing levels in order to meet commercial demand;

•

•

implement and maintain agreements with wholesalers and distributors on commercially reasonable terms;

receive adequate levels of coverage and reimbursement for EXPAREL and ZILRETTA from commercial health plans and governmental health
programs;

• maintain compliance with regulatory requirements;

•

•

obtain regulatory approvals for additional indications and geographic expansion for the use of EXPAREL and ZILRETTA;

ensure that our entire supply chain efficiently and consistently delivers EXPAREL and ZILRETTA to our customers; and

• maintain and defend our patent protection and regulatory exclusivity for EXPAREL and ZILRETTA.

Any disruption in our ability to generate revenues from the sale of EXPAREL and ZILRETTA will have a material and adverse impact on our results of

operations and financial condition.

Our efforts to successfully commercialize EXPAREL and ZILRETTA are subject to many internal and external challenges and if we cannot overcome
these challenges in a timely manner, our future revenues and profits could be materially and adversely impacted.

EXPAREL has been a commercialized drug since 2012. We continue to expend significant time and resources to train our sales force to be credible and

persuasive in convincing physicians, hospitals and ASCs to use EXPAREL. In addition, we also must train our sales force to ensure that a consistent and
appropriate message about EXPAREL is delivered to our potential customers. If we are unable to effectively train our sales force and equip them with effective
materials, including medical and sales literature to help them inform and educate potential customers about the benefits and risks of EXPAREL and its proper
administration, our efforts to successfully commercialize EXPAREL could be put in jeopardy, which could have a material adverse effect on our future
revenues and profits.

In addition to our extensive internal efforts, the successful commercialization of EXPAREL requires many third parties, over whom we have no control,
to continue to utilize EXPAREL. These third parties include physicians and hospital pharmacy and therapeutics committees (“P&T committees”). Generally,
before we can attempt to sell EXPAREL in a hospital, EXPAREL must be approved for addition to that hospital’s list of approved drugs, or formulary list, by
the hospital’s P&T committee. A hospital’s P&T committee typically governs all matters pertaining to the use of medications within the institution, including
the review of medication formulary data and recommendations for the appropriate use of drugs within the institution to the medical

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 35

Table of Contents

staff. The frequency of P&T committee meetings at hospitals varies considerably, and P&T committees often require additional information to aid in their
decision-making process. Therefore, we may experience substantial delays in obtaining formulary approvals. Additionally, hospital pharmacists may be
concerned that the cost of acquiring EXPAREL for use in their institutions will adversely impact their overall pharmacy budgets, which could cause
pharmacists to resist efforts to add EXPAREL to the formulary, or to implement restrictions on the usage of EXPAREL or to encourage use of a lower cost dose
than a surgeon or anesthesiologist would otherwise choose in order to control costs. We cannot guarantee that we will be successful in obtaining the approvals
we need from enough P&T committees quickly enough to optimize hospital sales of EXPAREL. Even if we obtain hospital formulary approval for EXPAREL,
physicians must still prescribe EXPAREL for its commercialization to be successful.

If EXPAREL does not achieve broader market acceptance, the revenues that we generate from its sales will be limited. The degree of market acceptance

of EXPAREL also depends on a number of other factors, including:

•

•

•

•

•

•

•

•

changes in the standard of care for the targeted indications for EXPAREL, which could reduce the marketing impact of any claims that we can
make; 

the relative efficacy, convenience and ease of administration of EXPAREL; 

the prevalence and severity of adverse events associated with EXPAREL; 

the cost of treatment versus economic and clinical benefit, both in absolute terms and in relation to alternative treatments; 

the availability of adequate coverage or reimbursement by third parties, such as insurance companies and other healthcare payers, and by
government healthcare programs, including Medicare and Medicaid;

the extent and strength of our marketing and distribution of EXPAREL;

the safety, efficacy and other potential advantages over, and availability of, alternative treatments, including, in the case of EXPAREL, a number
of products already used to treat pain in the hospital setting; and

distribution and use restrictions imposed by regulatory agencies or to which we agree as part of a mandatory risk evaluation and mitigation
strategy or voluntary risk management plan.

Our ability to effectively promote and sell EXPAREL and any product candidates that we may develop, license or acquire in the hospital or ASC
marketplace will also depend on pricing and cost effectiveness, including our ability to produce a product at a competitive price and therefore achieve
acceptance of the product onto hospital formularies, and our ability to obtain sufficient third-party coverage or reimbursement. We will also need to
demonstrate acceptable evidence of safety and efficacy, as well as relative convenience and ease of administration. Market acceptance could be further limited
depending on the prevalence and severity of any expected or unexpected adverse side effects associated with our product candidates.

In addition, our approved labels for EXPAREL do not contain claims that EXPAREL is safer or more effective than competitive products and do not

permit us to promote EXPAREL as being superior to competing products. Further, the availability of inexpensive generic forms of postsurgical pain
management products may also limit acceptance of EXPAREL among physicians, patients and third-party payers. If EXPAREL does not achieve a broader
level of acceptance among physicians, patients and third-party payers, we may not generate meaningful revenues from EXPAREL, and we may not remain
profitable.

ZILRETTA is only approved for the management of OA pain of the knee for patients in the U.S. Successful commercialization of ZILRETTA is subject

to many risks. Market acceptance of ZILRETTA will depend on a number of factors, including:

•

•

•

•

•

•

•

•

•

•

the efficacy and safety as demonstrated in clinical trials;

the ability to demonstrate the impact of real-world evidence;

the timing and market introduction of competitive products;

the product label and clinical indications for which the product is approved;

acceptance by physicians, the medical community and patients of the product as a safe and effective treatment;

the ability to distinguish safety and efficacy from existing, less expensive generic alternative therapies;

the convenience of prescribing, administrating and initiating patients on the product;

the potential and perceived advantages or value of the product over alternative treatments;

the cost of treatment in relation to alternative treatments, including any similar generic treatments;

the economics of a buy-and-bill product and discounts and rebates we offer;

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 36

Table of Contents

•

•

•

the availability of coverage and adequate reimbursement by third-party payers and government authorities to support pricing;

the prevalence and severity of adverse side effects; and

the effectiveness of sales and marketing efforts.

If ZILRETTA does not achieve a broader level of acceptance among physicians, patients and third-party payers, we may not generate meaningful

revenues from ZILRETTA, and our business, financial condition and results of operations may suffer.

If we are unable to achieve and maintain adequate levels of third-party payer coverage and reimbursement for any product we may offer, on reasonable
pricing terms, that product’s commercial success may be severely hindered.

ZILRETTA is a physician-administered product, and therefore physicians are required to purchase and manage the inventory of ZILRETTA, prior to
administering the product to patients. Physicians obtain reimbursement for ZILRETTA from the applicable third-party payer, such as Medicare or a health
insurance company, only after it has been administered to patients. This is called a “buy and bill” process. Because physicians are at financial risk for the cost
of a “buy and bill” product until they have been reimbursed, concerns about reimbursement can impact a physician’s decision to use the product. The future
growth of ZILRETTA depends on the availability of coverage and adequate reimbursement from third-party payers, including commercial payers,
governmental healthcare programs, such as Medicare and Medicaid and managed care organizations, among others. EXPAREL reimbursement is subject to the
same considerations in the ASC setting.

Patients who are prescribed medicine for the treatment of their conditions generally rely on third-party payers to reimburse all or part of the costs
associated with their prescription drugs. Coverage and adequate reimbursement from third-party payers are critical to product acceptance. Coverage decisions
may depend upon clinical and economic standards that disfavor drug products when more established or lower cost therapeutic alternatives are already
available or subsequently become available. The resulting reimbursement payment rates for EXPAREL and ZILRETTA might not be adequate or may require
co-payments that patients find unacceptably high. If coverage and reimbursement for EXPAREL and ZILRETTA are not available or only available at limited
levels, we may not be able to successfully commercialize EXPAREL and ZILRETTA, which could have a material adverse effect on our business, results of
operations and financial condition.

We face significant competition from other pharmaceutical, medical device and biotechnology companies. Our operating results will suffer if we fail to
compete effectively.

The pharmaceutical, medical device and biotechnology industries are intensely competitive and subject to rapid and significant technological change. Our
major competitors include organizations such as major multinational pharmaceutical and medical device companies, established biotechnology companies and
specialty pharmaceutical and generic drug companies. Many of our competitors have greater financial and other resources than we have, such as larger research
and development staff, more extensive marketing, distribution, sales and manufacturing organizations and experience, more extensive clinical trial and
regulatory experience, expertise in prosecution of intellectual property rights and access to development resources like personnel and technology. As a result,
these companies may obtain regulatory approval more rapidly than we are able to and may be more effective in selling and marketing their products. Smaller or
early stage companies may also prove to be significant competitors, particularly through collaborative arrangements with large, established companies. Our
competitors may succeed in developing, acquiring or licensing on an exclusive basis technologies, drug products and medical devices that are more effective or
less costly than EXPAREL, ZILRETTA, iovera° or any product candidate that we are currently developing or that we may develop, license or acquire, which
could render our products obsolete and noncompetitive or significantly harm the commercial opportunity for EXPAREL, ZILRETTA, iovera° or any of our
product candidates.

As a result of these factors, our competitors may obtain patent protection or other intellectual property rights that may limit our ability to develop other

indications for, or commercialize, EXPAREL, ZILRETTA, iovera° or any of our product candidates. Our competitors may also develop drugs or medical
devices that are safer, more effective, useful or less costly than ours and may be more successful than us in manufacturing and marketing their products.

EXPAREL competes with well-established products with similar indications. Competing products available for postsurgical pain management include

opioids such as morphine, fentanyl, meperidine and hydromorphone, each of which is available generically from several manufacturers, and several of which
are available as proprietary products using novel delivery systems. Ketorolac, an NSAID, is also available generically in the U.S. from several manufacturers,
and Caldolor (ibuprofen for injection), an NSAID, has been approved by the FDA for pain management and fever in adults. EXPAREL also faces competition
from currently marketed non-opioid products such as bupivacaine, marcaine, ropivacaine and other anesthetics/analgesics, all of which are also used in the
treatment of postsurgical pain and are available as either oral tablets, injectable dosage forms or administered using novel delivery systems. EXPAREL also
competes with elastomeric pumps and catheter devices intended to provide bupivacaine over several days and with off-label combinations of other approved
analgesics, called “cocktails”, that are combined by compound pharmacies in an attempt to extend the duration of pain control. Additional products may be
developed for the treatment of acute pain, including new injectable NSAIDs, novel opioids, new

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 37

Table of Contents

formulations of currently available opioids and NSAIDs, long-acting local anesthetics and new chemical entities as well as alternative delivery forms of various
opioids and NSAIDs. EXPAREL also competes with elastomeric bags and catheter devices intended to provide bupivacaine over several days.

ZILRETTA competes with immediate-release steroids and HA-containing products, as well as stem cell and PRP injections. Immediate-release TA and

other injectable immediate-release steroids, which are the current IA standard of care for OA pain, are available in generic form and are therefore relatively
inexpensive compared to the pricing for ZILRETTA. These generic steroids also have well-established market positions and familiarity with physicians,
healthcare payers and patients. Although we believe the proven and extended pain relief evidenced in clinical trials demonstrate that ZILRETTA represents a
clinically meaningful and highly efficacious option, it is possible that we will receive data from additional clinical trials or in a post-marketing setting from
physician and patient experiences with the commercial product that does not continue to support such interpretations.

The iovera° system competes with cryotherapy devices as well as other devices such as cooled radio-frequency ablation devices that block or degenerate

peripheral nerves involved in conducting pain signals.

Regulatory approval for any approved product is limited to those specific indications and conditions for which clinical safety and efficacy have been
demonstrated, and allegations of our failure to comply with such approved indications could limit our sales efforts and have a material adverse effect on
our business.

The marketing, labeling, advertising and promotion of prescription drugs and medical devices is strictly regulated. These regulations include standards
and restrictions for direct-to-consumer advertising, industry-sponsored scientific and educational activities, promotional activities involving the internet and
off-label promotion. Any regulatory approval granted is limited to those specific diseases and indications for which a product is deemed to be safe and effective
by an appropriate regulatory agency. For example, the FDA-approved label for EXPAREL does not include an indication in obstetrical paracervical block
anesthesia. In addition to the FDA approval required for new formulations, any new indication for an approved product also requires FDA approval. If we are
not able to obtain regulatory approval for any desired future indications for our products and product candidates, our ability to effectively market and sell our
products may be reduced and our business may be adversely affected.

As an example, in the U.S. and Europe, while physicians may choose, and are generally permitted to prescribe drugs, medical devices or treatments for
uses that are not described in the product’s labeling and for uses that differ from those tested in clinical trials and approved by the regulatory authorities, our
ability to promote the products is narrowly limited to those indications that are specifically approved by the FDA, EMA or MHRA. These “off-label” uses are
common across medical specialties and may constitute an appropriate treatment for some patients in varied circumstances. Regulatory authorities generally do
not regulate the behavior of physicians in their choice of treatments. Regulatory authorities do, however, restrict communications by pharmaceutical and
medical device companies on the subject of off-label use. In the U.S., although recent court decisions suggest that certain off-label promotional activities may
be protected under the First Amendment of the U.S. Constitution, the scope of any such protection is unclear. If our promotional activities fail to comply with
the FDA’s regulations or guidelines, we may be subject to warnings from, or enforcement action by, these authorities. In addition, our failure to follow FDA
rules and guidelines relating to promotion and advertising may cause the FDA to issue warning letters or untitled letters, bring an enforcement action against
us, suspend or withdraw an approved product from the market, require a recall or institute fines or civil fines, or could result in disgorgement of money,
operating restrictions, injunctions or criminal prosecution, any of which could harm our reputation and our business.

If we are unable to establish and maintain effective marketing and sales capabilities or enter into agreements with third parties to market and sell our
products, we may be unable to generate additional product revenues.

We are continuing to build our commercial infrastructure for the marketing, sale and distribution of pharmaceutical products. In order to continue
commercializing our products effectively, we must continue to build our marketing, sales and distribution capabilities. The establishment, development and
training of our sales force and related compliance plans to market our products is expensive and time consuming. In the event we are not successful in further
developing our marketing and sales infrastructure, we may not be able to continue to successfully commercialize our products, including outside the U.S.,
which would limit our ability to generate additional product revenues.

In addition to our internal marketing and sales efforts, we have entered into agreements with third-party distributors to promote and sell EXPAREL in
certain territories. For example, we previously had a co-promotion agreement with DePuy Synthes to market and promote the use of EXPAREL for orthopedic
procedures in the U.S. market which we terminated effective January 2021. Additionally, 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. for the development and commercialization (other than
manufacturing) of ZILRETTA in Greater China. In July 2022, we submitted a letter to HK Tainuo associated with this license agreement seeking a mutual
decision to end the licensing agreement and made a $13.0 million termination payment to HK Tainuo in January 2023. For more information, see Note 20,
Commitments and Contingencies, to our consolidated

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 38

Table of Contents

financial statements included herein. There can be no assurance that such distributors and promoters will be successful in marketing and promoting our
products.

We may seek additional distribution arrangements in the future, including arrangements with third-party distributors to commercialize and sell our

products in certain foreign countries. The use of distributors involves certain risks, including risks that such distributors will:

•

•

•

•

•

•

not effectively distribute or support our products;

not provide us with accurate or timely information regarding their inventories, the number of accounts using our products or complaints about our
products;

fail to comply with their obligations to us;

fail to comply with laws and regulations to which they are subject, whether in the U.S. or in foreign jurisdictions;

reduce or discontinue their efforts to sell or promote our products; or

cease operations.

Any such failure may result in decreased sales, which would have an adverse effect on our business.

We rely on third parties to perform many essential services for EXPAREL, ZILRETTA and iovera° and will rely on third parties for any other products that
we commercialize. If these third parties fail to perform as expected or to comply with legal and regulatory requirements, our ability to commercialize
EXPAREL, ZILRETTA and iovera° will be significantly impacted and we may be subject to regulatory sanctions.

We have entered into agreements with third-party service providers to perform a variety of functions related to the sale and distribution of EXPAREL,
ZILRETTA and iovera°, key aspects of which are out of our direct control. These service providers provide key services related to customer service support,
warehousing and inventory program services, distribution services, contract administration and chargeback processing services, accounts receivable
management and cash application services, financial management and information technology services. In addition, our finished goods inventory is stored at
three warehouses maintained by two service providers. We substantially rely on these providers as well as other third-party providers that perform services for
us, including entrusting our inventories of products to their care and handling. If these third-party service providers fail to comply with applicable laws and
regulations, fail to meet expected deadlines or otherwise do not carry out their contractual duties to us, or encounter physical or natural damage at their
facilities, our ability to deliver product to meet commercial demand would be significantly impaired. In addition, we may engage third parties to perform
various other services for us relating to adverse event reporting, safety database management, fulfillment of requests for medical information regarding our
product candidates and related services. If the quality or accuracy of the data maintained by these service providers is insufficient, we could be subject to
regulatory sanctions.

Distribution of our pMVL-based products, including EXPAREL, requires cold-chain distribution provided by third parties, whereby the product must be
maintained between specified temperatures. If a problem occurs in our cold-chain distribution processes, whether through our failure to maintain our products
or product candidates between specified temperatures or because of a failure of one of our distributors or partners to maintain the temperature of the products or
product candidates, the product or product candidate could be adulterated and rendered unusable. We have obtained limited inventory and cargo insurance
coverage for our products. However, our insurance coverage may not reimburse us or may not be sufficient to reimburse us for any expenses or losses we may
suffer. This could have a material adverse effect on our business, financial condition, results of operations and reputation.

We may need to increase the size of our organization and effectively manage our sales force, and we may experience difficulties in managing growth.

As of December 31, 2022, we had 715 employees. We may need to expand our personnel resources in order to manage our operations and sales of
EXPAREL, ZILRETTA, iovera° or any of our product candidates or products we acquire. Our management, personnel, systems and facilities currently in place
may not be adequate to support this future growth. In addition, we may not be able to recruit and retain qualified personnel in the future, particularly in
marketing positions, due to competition for personnel among pharmaceutical and medical device businesses, and the failure to do so could have a significant
negative impact on our future product revenues and business results. Our need to effectively manage our operations, growth and various projects requires that
we:

•

•

continue the hiring and training of an effective commercial organization for the commercialization of EXPAREL, ZILRETTA and iovera°, and
establish appropriate systems, policies and infrastructure to support that organization;

continue to establish and maintain effective relationships with distributors and commercial partners for the promotion and sale of our products;

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 39

Table of Contents

•

ensure that our distributors, partners, suppliers, consultants and other service providers successfully carry out their contractual obligations,
provide high quality results and meet expected deadlines;

• manage our development efforts and clinical trials effectively;

•

•

•

expand our manufacturing capabilities and effectively manage our co-production arrangements with Thermo Fisher and Carlisle;

continue to carry out our own contractual obligations to our licensors and other third parties; and

continue to improve our operational, financial and management controls, reporting systems and procedures.

We may be unable to successfully implement these tasks on a larger scale and, accordingly, may not achieve our development and commercialization
goals. Additionally, these tasks may impose a strain on our administrative and operational infrastructure. If we are unable to effectively manage our growth, our
product sales and resulting revenues will be negatively impacted.

We may not be able to manage our business effectively if we are unable to attract and retain key personnel.

We may not be able to attract or retain qualified management and commercial, scientific and clinical personnel due to the intense competition for
qualified personnel among biotechnology, pharmaceutical, medical device and other businesses, as well as universities, non-profit research organizations and
government entities, particularly in and around Tampa, Florida; San Diego, California; northern New Jersey and Houston, Texas. If we are not able to attract
and retain necessary personnel to accomplish our business objectives, we may experience constraints that will significantly impede the achievement of our
development objectives, our ability to raise additional capital and our ability to implement our business strategy.

Our industry has experienced a high rate of turnover of management personnel in recent years. We are highly dependent on the development and

manufacturing expertise for our products and pMVL drug delivery technology and the commercialization expertise of certain members of our senior
management. In particular, we are highly dependent on the skills and leadership of our senior management team. If we lose one or more of these key
employees, our ability to successfully implement our business strategy could be seriously harmed. Replacing key employees may be difficult and may take an
extended period of time because of the limited number of individuals in our industry with the breadth of skills and experience required to develop, gain
regulatory approval of and commercialize products successfully. Competition to hire from this limited talent pool is intense, and we may be unable to hire,
train, retain or motivate additional key personnel.

Competition for highly skilled personnel, including management and commercial, scientific and clinical personnel, is extremely competitive, particularly
in and around Tampa, Florida; San Diego, California; northern New Jersey and Houston, Texas. While we permit remote work arrangements, which allows us
to recruit employees outside of the geographic areas we operate in, we have experienced—and may continue to experience—some difficulty identifying and
hiring qualified personnel, especially as we pursue our growth strategy. We may not be able to hire or retain such personnel at compensation or flexibility levels
consistent with our existing policies. We periodically review our compensation levels to ensure they remain competitive and have increased them when we
believe market conditions warrant it. We may need to further increase our existing compensation levels in response to competition or labor shortages, which
would increase our operating costs and reduce our margins. Furthermore, a sustained labor shortage, lack of skilled labor, increased turnover or labor cost
inflation, caused by the ongoing COVID-19 pandemic or as a result of general macroeconomic factors, could lead to increased costs, which could negatively
affect our ability to efficiently operate our overall business and have other adverse effects on our results of operations and financial condition. Many of the
companies with which we compete for experienced employees have greater resources than we have and may be able to offer more attractive terms of
employment. In particular, candidates making employment decisions, specifically in our industry, often consider the value of any stock-based compensation
they may receive in connection with their employment. Any significant volatility in the price of our common stock may adversely affect our ability to attract or
retain highly skilled technical, financial and marketing personnel.

We face potential product liability exposure, and if successful claims are brought against us, we may incur substantial liability for EXPAREL, ZILRETTA,
iovera° or any product candidates that we may develop and may have to limit their commercialization.

The use of EXPAREL, ZILRETTA, iovera° and any product candidates that we may develop, license or acquire in clinical trials and the sale of any
products for which we obtain regulatory approval expose us to the risk of product liability claims. Product liability claims might be brought against us by
consumers, health care providers or others using, administering or selling our products. We have been a party of these suits in the past and may be again in the
future. If we cannot successfully defend ourselves against these claims, we will incur substantial liabilities. Regardless of merit or eventual outcome, liability
claims may result in:

•

•

•

loss of revenue from decreased demand for our products and/or product candidates;

impairment of our business reputation or financial stability;

costs of any related litigation;

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 40

Table of Contents

•

•

substantial monetary awards to patients or other claimants;

diversion of management attention;

• withdrawal of clinical trial participants and potential termination of clinical trial sites or entire clinical programs; and

•

the inability to commercialize our products and/or product candidates.

We have obtained limited product liability insurance coverage for our products and our clinical trials with a $10.0 million annual aggregate coverage
limit. However, our insurance coverage may not reimburse us, or may not be sufficient to reimburse us, for any expenses or losses we may suffer, including our
indemnification obligations to other parties. Moreover, insurance coverage is becoming increasingly expensive, and, in the future, we may not be able to
maintain insurance coverage on acceptable terms, at a reasonable cost or in sufficient amounts to protect us against losses due to liability. We intend to expand
our insurance coverage to include the sale of additional commercial products upon regulatory approval for our product candidates in development, but we may
be unable to obtain commercially reasonable product liability insurance for any products approved for marketing, or at all. On occasion, large judgments have
been awarded in class action lawsuits based on drugs or medical devices that had unanticipated side effects. A successful product liability claim or series of
claims brought against us could cause the price of our common stock to fall and, if judgments exceed our insurance coverage, could decrease our cash balance
and adversely affect our business.

If we fail to manufacture our products in sufficient quantities and at acceptable quality and pricing levels, or to fully comply with CGMP regulations, we
may face delays in the commercialization of these products or be unable to meet market demand, and may lose potential revenues.

The manufacture of our products requires significant expertise and capital investment, including the development of advanced manufacturing techniques,
process controls and the use of specialized processing equipment. We must comply with federal, state and foreign regulations, including the FDA’s regulations
governing CGMP, enforced by the FDA through its facilities inspection program and by similar regulatory authorities in other jurisdictions where we do
business. These requirements include, among other things, quality control, quality assurance and the maintenance of records and documentation. The FDA or
similar foreign regulatory authorities at any time may implement new standards or change their interpretation and enforcement of existing standards for
manufacture, packaging or testing of our products. Any failure by us or our manufacturing partners to comply with applicable regulations may result in fines
and civil penalties, suspension of production, product seizure or recall, operating restrictions, imposition of a consent decree, modification or withdrawal of
product approval or criminal prosecution and would limit the availability of our product. Any manufacturing defect or error discovered after products have been
produced and distributed also could result in significant consequences, including costly recall procedures, re-stocking costs, damage to our reputation and the
potential for product liability claims.

The FDA requires manufacturers of medical devices to adhere to certain regulations, including the FDA’s QSRs, which requires periodic audits, design
controls, quality control testing and documentation procedures, as well as complaint evaluations and investigations. Regulations regarding the development,
manufacture and sale of medical products are evolving and are subject to change in the future.

If we are unable to produce the required commercial quantities of our products to meet market demand those products on a timely basis or at all, or if we

fail to comply with applicable laws for the manufacturing of our products, we will suffer damage to our reputation and commercial prospects, we will lose
potential revenues and we may be required to expend significant time and resources to resolve any such issues.

We may need to expand our manufacturing operations or outsource such operations to third parties.

To successfully meet future customer demand for EXPAREL, ZILRETTA and iovera°, we may need to expand our existing commercial manufacturing
facilities or establish large-scale commercial manufacturing capabilities. In addition, as our drug development pipeline increases and matures, we will have a
greater need for clinical trial and commercial manufacturing capacity. As a result, we must continue to improve our manufacturing processes to allow us to
reduce our production costs. We may not be able to manufacture our drugs and/or medical devices at a cost or in quantities necessary to be commercially
successful.

The build-up or other expansion of our internal manufacturing capabilities for EXPAREL production at our Science Center Campus in San Diego,
California and co-production capabilities for EXPAREL and ZILRETTA at Thermo Fisher’s Swindon, England site, exposes us to significant up-front fixed
costs. If market demand for our products does not align with our expanded manufacturing capacity, we may be unable to offset these costs or achieve
economies of scale, and our operating results may be adversely affected as a result of high operating expenses. Alternatively, if we experience demand for our
products in excess of our estimates, our facilities may be insufficient to support higher production volumes, which could harm our customer relationships and
overall reputation. Our ability to meet such excess demand could also depend on our ability to raise additional capital and effectively scale our manufacturing
operations.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 41

Table of Contents

In addition, the procurement time for the equipment that we use to manufacture EXPAREL and ZILRETTA requires long lead times. Therefore, we may
experience delays, additional or unexpected costs and other adverse events in connection with our capacity expansion projects, including those associated with
potential delays in the procurement of manufacturing equipment required to manufacture EXPAREL or ZILRETTA.

In addition to expanding our internal manufacturing facilities, we may enter into arrangements with third parties to supply, manufacture, package, test
and/or store EXPAREL, ZILRETTA, iovera° or our product candidates, such as our manufacturing arrangements with Thermo Fisher and Carlisle. Entering
into such arrangements requires testing and compliance inspections, regulatory agency approvals and development of the processes and facilities necessary for
the production of our products. Such arrangements also involve additional risks, many of which would be outside of our control. Such risks include disruptions
or delays in production, manufactured products that do not meet our required specifications, the failure of such third-party manufacturers to comply with
CGMP regulations or other regulatory requirements, protection of our intellectual property and manufacturing processes, loss of control of our complex
manufacturing processes, inabilities to fulfill our commercial needs and financial risks in connection with our investment in setting up a third-party
manufacturing process, such as the substantial capital outlays that were required by us to assist in setting up our manufacturing process at Thermo Fisher’s
facility in Swindon, England..

If we are unable to timely achieve and maintain satisfactory production yields and quality, whether through our internal manufacturing capabilities or

arrangements with contract manufacturers, our relationships with customers and our reputation may be harmed and our revenues could decrease.

Our inability to continue manufacturing adequate quantities of our products could result in a disruption in the supply to our customers and partners,
which could have a material adverse impact on our business and results of operations.

EXPAREL is currently manufactured at our facilities in San Diego, California; both EXPAREL and ZILRETTA are currently manufactured at the Thermo

Fisher facility in Swindon, England and iovera° is currently manufactured at our facilities in San Diego, California and at the Carlisle facility in Tijuana,
Mexico. These facilities are the only currently approved sites in the world for manufacturing EXPAREL, ZILRETTA and iovera°. We may experience
temporary or prolonged suspensions in production of our products due to issues in our manufacturing process that must be remediated or in response to
inspections conducted by the FDA or similar foreign regulatory authorities, which could have a material adverse effect on our business, financial position and
results of operations.

Our San Diego facility in California, the Thermo Fisher facility in Swindon, England and the Carlisle facility in Tijuana, Mexico are also subject to the
risks of a natural or man-made disaster, including earthquakes, floods and fires, or other business disruptions. In addition, we have obtained limited property
and business interruption insurance coverage for our manufacturing sites in San Diego, England and Mexico. However, our insurance coverage may not
reimburse us, or may not be sufficient to reimburse us, for any expenses or losses we may suffer. There can be no assurance that we would be able to meet our
requirements for EXPAREL, ZILRETTA or iovera° if there were a catastrophic event or failure of our current manufacturing systems. If we are required to
change or add a new manufacturer or supplier, the process would likely require prior FDA and/or equivalent foreign regulatory authority approval, would be
very time consuming and could be expensive. An inability to continue manufacturing adequate supplies of EXPAREL, ZILRETTA or iovera° at our facilities
could result in a disruption in the supply of these products to our customers and partners and a breach of our contractual obligations to such counterparties.

Our co-production and other agreements with Thermo Fisher may involve unanticipated expenses and delays.

We and Thermo Fisher have entered into a Co-Production Agreement, Technical Transfer and Service Agreement and Manufacturing and Supply

Agreement. Under these agreements, Thermo Fisher undertook certain technical transfer activities and construction services to prepare their Swindon, England
facility for the manufacture of EXPAREL in two dedicated manufacturing suites, of which the first suite received FDA approval in May 2018 and began
commercial production in February 2019. In August 2021, the second EXPAREL suite received FDA approval and began commercial production. We agreed
with Thermo Fisher, among other things, to provide them with the process equipment necessary to manufacture EXPAREL in these suites.

Prior to the Flexion Acquisition, Flexion and Thermo Fisher entered into the ZILRETTA Manufacturing and Supply Agreement and the ZILRETTA
Technical Transfer and Service Agreement related to the manufacture of ZILRETTA at the same Thermo Fisher site in Swindon, England where our 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 Thermo Fisher facilities required regulatory approval prior to any production and manufacturing of EXPAREL and ZILRETTA. While we have

anticipated and budgeted for additional capital expenditures associated with the Thermo Fisher

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 42

Table of Contents

suites for both EXPAREL and ZILRETTA, if the Thermo Fisher suites do not maintain their regulatory approvals (or fail to receive any additional regulatory
approvals that may be needed in the future), this could have a material adverse effect on our business, financial position and results of operations.

Further, the production under these agreements involve additional risks, many of which would be outside of our control, such as disruptions or delays in

production, manufactured products that do not meet our required specifications, the failure of Thermo Fisher to comply with CGMP regulations or other
regulatory requirements, protection of our intellectual property and manufacturing processes, loss of control of our complex manufacturing processes and
inabilities to fulfill our commercial needs.

We rely on third parties for the timely supply of specified raw materials and equipment for the manufacture of EXPAREL, ZILRETTA and iovera°.
Although we actively manage these third-party relationships to provide continuity and quality, some events which are beyond our control could result in the
complete or partial failure of these goods and services. Any such failure could have a material adverse effect on our financial condition and operations.

We purchase certain raw materials and equipment from various suppliers in order to manufacture our products. The acquisition of certain materials may

require considerable lead times, and our ability to source such materials is also dependent on logistics providers. If we are unable to source the required raw
materials and equipment on a timely basis or receive materials that do not meet our specifications, we may experience delays in manufacturing, which would
have a material and adverse impact on our results of operations and financial condition as well as not being able to meet our customers’ or partners’ demands
for our products. Additionally, we have some single sources of supply for certain materials and equipment used in our manufacturing processes. Should the
need arise to qualify additional suppliers or change suppliers, we could bear substantial costs and could fail to maintain adequate production levels to meet
demand for our products. In addition, we and our third-party suppliers must comply with federal, state and foreign regulations, including CGMP regulations,
and any failure to comply with applicable regulations, or failure of government agencies to provide necessary authorizations, may harm our ability to
manufacture and commercialize our products on a timely and competitive basis, which could result in decreased product sales and lower revenues.

As the global impact of COVID-19 continues, we may experience additional disruptions that could severely impact our supply chain, which would disrupt

our clinical trials and commercialization efforts. To the extent that our vendors are unable to comply with their obligations under our agreements or cannot
deliver goods or services timely, our ability to continue meeting commercial demand for our products or advancing development of our product candidates may
become impaired. Furthermore, raw materials and supplies needed to manufacture COVID-19 vaccines have been backed by government mandate orders,
impacting our suppliers’ ability to supply critical raw materials for our products.

Supply chain disruptions could interrupt product manufacturing and global logistics and increase product costs.

We rely on international shipping to receive certain raw materials and to transport our products to their various geographic markets. Delays in shipping
may cause us to use more expensive expedited freight methods to ship our products or receive raw materials. The ongoing COVID-19 pandemic and related
governmental actions have also caused delays in shipments. During the year ended December 31, 2022, we experienced increased lead-times for obtaining raw
materials, including those caused by temporary closures and worker shortages. In addition, global inflation has contributed to already higher incremental freight
costs and such inflation may continue to result in further increases in freight costs. Failure to adequately produce and timely ship our products to customers
could lead to lost potential revenue, failure to meet customer demand and strained relationships with customers—including wholesalers. Failure to adequately
procure raw materials or equipment or produce and timely ship our products to customers could lead to lost potential revenue, failure to meet customer demand
and strained relationships with our customers—including wholesalers. Despite our actions to mitigate these impacts, we may still be impacted by global
logistics challenges in 2023.

Our operations are dependent on the global supply chain and impacts of supply chain constraints and inflationary pressure could adversely impact our
operating results.

Our operations have been, and may continue to be, impacted by supply chain constraints and raw material shortages, resulting in increased material costs,

longer lead times and increased freight costs caused, in part, by the COVID-19 pandemic, the uncertain economic environment and macroeconomic trends. In
addition, current or future governmental policies may increase the risk of inflation, which could further increase the costs of raw materials and components for
our business. Similarly, if costs of goods continue to increase, our suppliers may seek price increases from us. If we are unable to mitigate the impact of supply
chain constraints and inflationary pressure through price increases or other measures, our results of operations and financial condition could be negatively
impacted. Even though we are working to alleviate supply chain constraints through various measures, we are unable to predict the impact of these constraints
on the timing of revenue and operating costs of our business in the near future. Raw material supply shortages and supply chain constraints, including cost
inflation, have impacted and could continue to negatively impact our ability to meet increased demand, which in turn could impact our net sales

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 43

Table of Contents

revenues and market share. We expect the situation to remain fluid as any deterioration in circumstances related to COVID-19 variants occur, as foreign
exchange rates fluctuate and as inflationary pressure continues.

Our future growth depends—in part—on our ability to identify, develop, acquire or in-license products and if we do not successfully identify, develop,
acquire or in-license related product candidates or integrate them into our operations, we may have limited growth opportunities.

An important part of our business strategy is to continue to develop a pipeline of product candidates by developing, acquiring or in-licensing products,
businesses or technologies that we believe are a strategic fit with our focus on the hospital marketplace. However, these business activities may entail numerous
operational and financial risks, including:

•

•

•

•

•

•

•

•

•

•

•

•

significant capital expenditures;

difficulty or inability to secure financing to fund development activities for such development, acquisition or in-licensed products or technologies;

incurrence of substantial debt or dilutive issuances of securities to pay for the development, acquisition or in-licensing of new products;

the successful integration of acquired products, businesses or technologies into our operations, and achieving the expected benefits and synergies
from such acquisitions;

disruption of our business and diversion of our management’s time and attention;

higher than expected development, acquisition or in-license and integration costs;

exposure to unknown liabilities;

difficulty and cost in combining the operations and personnel of any acquired businesses with our operations and personnel;

inability to retain key employees of any acquired businesses;

difficulty entering markets in which we have limited or no direct experience;

difficulty in managing multiple product development programs; and

inability to successfully develop new products or clinical failure.

We have limited resources to identify and execute the development, acquisition or in-licensing of products, businesses and technologies and integrate

them into our current infrastructure. We may compete with larger pharmaceutical and medical device companies and other competitors, including public and
private research organizations, academic institutions and government agencies, in our efforts to establish new collaborations and in-licensing opportunities.
These competitors may have access to greater financial resources, research and development staffs and facilities than us and may have greater expertise in
identifying and evaluating new opportunities. We may not be successful in locating and acquiring or in-licensing additional desirable product candidates on
acceptable terms or at all. We may also not be successful in developing or commercializing our current product candidates. Such efforts may require the
dedication of significant financial and personnel resources, and any diversion of resources may also disrupt our management from expanding on EXPAREL,
ZILRETTA or iovera° sales. Moreover, we may devote resources to potential development, acquisitions or in-licensing opportunities that are never completed,
or we may fail to realize the anticipated benefits of such efforts.

We make substantial investments in research and development and unsuccessful investments could materially adversely affect our business, financial
condition and results of operations.

The industry in which we compete is characterized by rapid technological change, changes in customer requirements, frequent new product introductions

and enhancements, evolving industry standards and new delivery methods. In order to remain competitive, we have made, and expect to continue to make,
significant investments in research and development. If we fail to develop new and enhanced products and technologies, if we focus on products and
technologies that do not become widely adopted, or if new competitive products and technologies that we do not support become widely accepted, demand for
our products may be reduced. Increased investments in research and development or unsuccessful research and development efforts could cause our cost
structure to fall out of alignment with demand for our products, which would have a negative impact on our financial results.

Our business involves the use of hazardous materials and we must comply with environmental laws and regulations, which can be expensive and restrict
how we do business.

Our manufacturing activities involve the controlled storage, use and disposal of hazardous materials, including the components of our products, product
candidates and other hazardous compounds. We are subject to federal, state and local laws and regulations governing the use, manufacture, storage, handling,
release and disposal of, and exposure to, these hazardous

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 44

Table of Contents

materials. Violation of these laws and regulations could lead to substantial fines and penalties. Although we believe that our safety procedures for handling and
disposing of these materials comply with the standards prescribed by these laws and regulations, we cannot eliminate the risk of accidental contamination or
injury from these materials or unintended failure to comply with these laws and regulations. In the event of an accident or failure to comply with these laws and
regulations, federal, state or local authorities may curtail our use of these materials and interrupt our business operations. In addition, we could become subject
to potentially material liabilities relating to the investigation and cleanup of any contamination, whether currently unknown or caused by future releases.

Any collaboration arrangements that we may enter into in the future may not be successful, which could adversely affect our ability to develop and
commercialize our product candidates.

Our business model is to commercialize our products in the U.S. and abroad, occasionally seeking collaboration arrangements with pharmaceutical or

biotechnology companies for the development or commercialization of our products in other countries. Accordingly, we may enter into collaboration
arrangements in the future on a selective basis. Any future collaboration arrangements that we enter into may not be successful. The success of our
collaboration arrangements will depend heavily on the efforts and activities of our collaborators. Collaborators generally have significant discretion in
determining the efforts and resources that they will apply to these collaboration arrangements.

Disagreements between parties to a collaboration arrangement regarding clinical development and commercialization matters can lead to delays in the

development process or commercializing the applicable product candidate(s) and, in some cases, termination of the collaboration arrangement. These
disagreements can be difficult to resolve if neither of the parties has final decision-making authority.

Collaborations with pharmaceutical and/or medical device companies and other third parties often are terminated or allowed to expire by the other party.

Any such termination or expiration would adversely affect us financially and could harm our business reputation.

Clinical trials are expensive, lengthy and have uncertain outcomes, and results of earlier studies and trials may not be predictive of future trial results.
Clinical trials may fail to demonstrate the safety and efficacy of our drug products or medical devices, which could prevent or significantly delay obtaining
regulatory approval.

Prior to receiving approval to commercialize any of our drug products or medical devices, we must demonstrate with scientifically appropriate and
statistically sound evidence from well-controlled clinical trials, and to the satisfaction of the FDA and other regulatory authorities, that each of the products are
both safe and effective. For each drug product, we will need to demonstrate its efficacy and monitor its safety throughout the process. Clinical trials are
expensive and can take many years to complete, and their outcomes are inherently uncertain. If such development is unsuccessful, our business and reputation
would be harmed and our stock price would be adversely affected.

All of our drug and medical device products are prone to the risks of failure inherent in development. Clinical trials of new drug and medical device
products sufficient to obtain regulatory approval are expensive and take years to complete. We may not be able to successfully complete clinical testing within
the time frame we have planned, or at all. We may experience numerous unforeseen events during, or as a result of, the clinical trial process which could delay
or prevent us from receiving regulatory approval or commercializing our products. In addition, the results of preclinical studies and early stage clinical trials of
our products do not necessarily predict the results of later-stage clinical trials. Later-stage clinical trials may fail to demonstrate that a product is safe and
effective despite having progressed through initial clinical testing. Even if we believe the data collected from clinical trials of our products is promising, such
data may not be sufficient to support approval by regulatory agencies. Preclinical and clinical data can be interpreted in different ways, and results generated in
our completed clinical trials do not ensure that any future clinical trials will be successful or consistent with the results generated in previous trials.

Accordingly, regulatory authorities could interpret such data in different ways than we or our partners do, which could delay, limit or prevent regulatory
approval. Regulatory authorities, our institutional review boards, our contract research organizations, or CROs, or we ourselves may suspend or terminate our
clinical trials for our drug products and medical devices. Any failure or significant delay in completing clinical trials for our drug products or medical devices,
or in receiving regulatory approval for the sale of any of our drugs or medical devices, may severely harm our business and reputation. Even if we receive
regulatory approvals, our drug and medical device products may later exhibit adverse effects that may limit or prevent their widespread use, may cause a
regulatory authority to revoke, suspend or limit their approval, or may force us to withdraw products derived from those drug or medical device products from
the market.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 45

Table of Contents

Our dependence on contract research organizations could result in delays in and additional costs for our drug development efforts.

We may rely on CROs to perform preclinical testing and clinical trials for drug candidates that we choose to develop without a collaborator. If the CROs

that we hire to perform our preclinical testing and clinical trials or our collaborators or licensees do not meet deadlines, do not follow proper procedures or a
conflict arises between us and our CROs, our preclinical testing and clinical trials may take longer than expected, may be delayed or may be terminated. If we
were forced to find a replacement CRO to perform any of our preclinical testing or clinical trials, we may not be able to find a suitable replacement on
favorable terms, if at all. Even if we were able to find another CRO to perform a preclinical test or clinical trial, any material delay in a test or clinical trial may
result in significant additional expenditures that could adversely affect our operating results. Events such as these may also delay regulatory approval for our
drug candidates or our ability to commercialize our products.

We depend on clinical investigators and clinical sites to enroll patients in our clinical trials and sometimes other third parties to manage the trials and to
perform related data collection and analysis, and, as a result, we may face costs and delays outside of our control.

We rely on clinical investigators and clinical sites to enroll patients and sometimes third parties to manage our trials and to perform related data collection
and analysis. However, we may be unable to control the amount and timing of resources that the clinical sites which conduct the clinical testing may devote to
our clinical trials.

Our clinical trials may be delayed or terminated due to the inability of our clinical investigators to enroll enough qualified patients. Patient enrollment
depends on many factors, including the size of the patient population, the nature of the trial protocol, the proximity of patients to clinical sites and the eligibility
criteria for the trial. If our clinical investigators and clinical sites fail to enroll a sufficient number of patients in our clinical trials or fail to enroll them on our
planned schedule, we may face increased costs, delays or termination of the trials, which could delay or prevent us from obtaining regulatory approvals for our
product candidates.

Our agreements with clinical investigators and clinical sites for clinical testing and for trial management services place substantial responsibilities on
these parties, which could result in delays in, or termination of, our clinical trials if these parties fail to perform as expected. For example, if any of our clinical
trial sites fail to comply with FDA-approved GCPs, we may be unable to use the data gathered at those sites. If these clinical investigators, clinical sites or
other third parties do not carry out their contractual duties or obligations or fail to meet expected deadlines, or if the quality or accuracy of the clinical data they
obtain is compromised due to their failure to adhere to our clinical protocols or for other reasons, our clinical trials may be extended, delayed or terminated, and
we may be unable to obtain regulatory approval for, or successfully commercialize, our product candidates.

We are subject to periodic litigation, which could result in losses or unexpected expense of time and resources.

From time to time, we are called upon to defend ourselves against lawsuits relating to our business. Due to the inherent uncertainties of litigation, we

cannot accurately predict the ultimate outcome of any such proceedings. See Note 20, Commitments and Contingencies, to our consolidated financial
statements included herein for information about our legal proceedings. An unfavorable outcome in these or other proceedings could have an adverse impact on
our business, financial condition and results of operations. In addition, any significant litigation in the future, regardless of its merits, could divert
management’s attention from our operations and result in substantial legal fees. In addition, if our stock price is volatile, we may become involved in additional
securities class action lawsuits in the future. Any litigation could result in substantial costs and a diversion of management’s attention and resources that are
needed to successfully run our business.

For more information about our legal proceedings, see Note 20, Commitments and Contingencies, to our consolidated financial statements included

herein.

Guidelines and recommendations published by various organizations could reduce the demand for or use of our products.

Government agencies promulgate regulations and guidelines directly applicable to us and to our products and product candidates. In addition, professional

societies, practice management groups, private health and science foundations and other organizations from time to time may publish papers, guidelines or
recommendations to the healthcare and patient communities with respect to specific products or classes of products. Recommendations of government agencies
or these other groups or organizations may relate to such matters as usage, dosage, route of administration and use of concomitant therapies. Recommendations
or guidelines that do not recognize a product, suggest limitations or inadequacies of a product or suggest the use of competitive or alternative products as the
standard of care to be followed by patients and healthcare providers could result in decreased use or adoption of any of our products which could have an
adverse impact on our business, financial condition and results of operations.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 46

    
    
Table of Contents

Regulatory Risks

Our business could be materially adversely affected if a regulatory or enforcement agency determines that we are promoting or have in the past promoted
the “off-label” use of our products.

The marketing, labeling, advertising and promotion of prescription drugs and medical devices is strictly regulated. These regulations include standards
and restrictions for direct-to-consumer advertising, industry-sponsored scientific and educational activities, promotional activities involving the internet and
off-label promotion. According to these regulations, companies may not promote drugs or medical devices for “off-label” uses—that is—uses that are not
consistent with the product’s labeling and that differ from those that were approved by the FDA, EMA, MHRA or other regulatory agency. For example, the
FDA-approved label for EXPAREL does not include an indication in obstetrical paracervical block anesthesia. In addition to the FDA approval required for
new formulations or device enhancements, any new indication for an approved product also requires FDA approval. If we are not able to obtain regulatory
approval for any desired future indications for our products and product candidates, our ability to effectively market and sell our products may be reduced and
our business may be adversely affected.

As an example, while physicians may choose, and are generally permitted to prescribe drugs and/or medical devices for uses that are not described in the

product’s labeling and for uses that differ from those tested in clinical trials and approved by a regulatory authority, our ability to promote the products is
narrowly limited to those indications that are approved by the FDA or other regulatory agency. “Off-label” uses are common across medical specialties and
may constitute an appropriate treatment for some patients in varied circumstances. Regulatory authorities generally do not regulate the behavior of physicians
in their choice of treatments. Regulatory authorities do, however, restrict communications by pharmaceutical and medical device companies on the subject of
off-label use. Although recent court decisions suggest that certain off-label promotional activities may be protected under the First Amendment of the U.S.
Constitution, the scope of such protection is unclear. Moreover, while we promote our products consistent with what we believe to be the approved indication
for our drugs and medical devices, regulators may disagree. If a regulatory agency determines that our promotional activities fail to comply with their
regulations or guidelines, we may be subject to warnings from, or enforcement action by, these authorities. In addition, our failure to follow rules and
guidelines relating to promotion and advertising may cause a regulatory body to issue warning letters or untitled letters, bring an enforcement action against us,
suspend or withdraw an approved product from the market, require a recall or institute fines or civil fines, or could result in disgorgement of money, operating
restrictions, injunctions or criminal prosecution, any of which could harm our reputation and our business.

For example, in September 2014, we received a warning letter from the FDA’s Office of Prescription Drug Promotion (OPDP) pertaining to certain
promotional aspects of EXPAREL. We took actions to immediately address the FDA’s concerns and minimize further disruption to our business. Ultimately,
however, in September 2015, we, along with two independent physicians, filed a lawsuit in federal court against the FDA and other governmental defendants
seeking to exercise our lawful rights to communicate truthful and non-misleading information about EXPAREL. The complaint outlined our belief that the
FDA’s warning letter received in September 2014 and regulations restricting our truthful and non-misleading speech about EXPAREL violated the
Administrative Procedure Act and the First and Fifth Amendments of the U.S. Constitution. The lawsuit sought a declaration and injunctive relief to permit us
to promote EXPAREL consistent with its approved indication and pivotal trials that supported FDA approval. On December 15, 2015, we announced that the
FDA had formally withdrawn the September 2014 Warning Letter via a “Rescission Letter,” and that the FDA and Pacira had reached an amicable resolution of
the lawsuit. As part of the resolution of this matter, the FDA confirmed that EXPAREL was broadly approved for “administration into the surgical site to
produce postsurgical analgesia” in a variety of surgeries not limited to those studied in its pivotal trials. The FDA also approved a labeling supplement for
EXPAREL that further clarified that EXPAREL was not limited to any specific surgery type or site, that the proper dosage and administration of EXPAREL is
based on various patient and procedure-specific factors, that there was a significant treatment effect for EXPAREL compared to placebo over the first 72 hours
in the pivotal hemorrhoidectomy trial and that EXPAREL may be admixed with bupivacaine, provided certain medication ratios are observed. The Warning
Letter and labeling supplement only applied to the infiltration indication that was approved at that time, and does not apply to the interscalene brachial plexus
nerve block indication subsequently approved in April 2018. We and the FDA agreed that, in future interactions, the parties will deal with each other in an
open, forthright and fair manner.

In April 2015, we received a subpoena from the U.S. Department of Justice, U.S. Attorney’s Office for the District of New Jersey, requiring the
production of a broad range of documents pertaining to marketing and promotional practices related to EXPAREL. In July 2020, we formally entered into
settlement agreements that resolved all outstanding investigations and claims by the U.S. Department of Justice, the U.S. of Health and Human Services,
various States Attorneys’ General and a private plaintiff (the “Plaintiffs”). This agreement concluded a five-year investigation related to the sale and marketing
of EXPAREL. Under the various settlement agreements, we paid a global settlement of $3.5 million. As part of the settlement, we

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 47

Table of Contents

admitted to no wrongdoing and explicitly denied the Plaintiffs’ allegations. We have been given assurances that this concluded the investigation that originated
from the U.S. Department of Justice subpoena in April 2015.

We are unable to predict whether any future regulatory actions will have an effect on our product sales, and even if such actions are ultimately resolved

favorably, our sales may suffer due to reputational or other concerns. We can make no assurances that we will not receive warning letters in the future from the
FDA or other regulatory authority or be subject to other regulatory action. As noted above, any regulatory violation or allegations of a violation may have a
material adverse effect on our reputation and business.

We may not receive regulatory approval for any of our product candidates, or the approval may be delayed for various reasons, including successful
challenges to the FDA’s interpretation of Section 505(b)(2), which would have a material adverse effect on our business and financial condition.

We may experience delays in our efforts to obtain regulatory approval from the FDA for any of our product candidates, and there can be no assurance that

such approval will not be delayed, or that the FDA will ultimately approve these product candidates. Although the FDA’s longstanding position has been that
the agency may rely upon prior findings of safety or effectiveness to support approval of a 505(b)(2) application, this policy has been controversial and subject
to challenge in the past. If the FDA’s policy is successfully challenged administratively or in court, we may be required to seek approval of our products via full
NDAs that contain a complete data package demonstrating the safety and effectiveness of our product candidates, which would be time-consuming, expensive
and would have a material adverse effect on our business and financial condition.

The FDA, as a condition of the EXPAREL NDA approval on October 28, 2011, has required us to study EXPAREL in pediatric patients as a post-
marketing requirement. We have agreed to a trial timeline where we will study successive pediatric patient subpopulations. In December 2019, we announced
positive results for our extended pharmacokinetic and safety study for local analgesia in children aged 6 to 17 undergoing cardiovascular or spine surgeries.
Those positive results provided the foundation for an sNDA submission which was approved by the FDA in March 2021. Additionally, we are in negotiations
with the FDA and EMA for clarity on other pediatric study obligations for children aged zero to less than six years old. These trials will be expensive and time
consuming and we are required to meet the timelines for submission of protocols and data and for completion as agreed with the FDA and EMA, and we may
be delayed in meeting such timelines. We are required to conduct these trials even if we believe that the costs and potential benefits of conducting the trials are
not warranted from a scientific or financial perspective. The failure to conduct these pediatric trials or to meet applicable deadlines could result in the
imposition of sanctions, including, among other things, issuance of warnings letters or imposition of seizures or injunctions. For more information, see Note 20,
Commitments and Contingencies, to our consolidated financial statements included herein.

For iovera° and any other potential medical device, we must obtain clearance or approval from the FDA or other regulatory authorities prior to
introducing a new product or a modification to an existing product. The regulatory clearance process may result in substantial delays, unexpected or
additional costs and other unforeseen factors and limitations on the types and uses of products we would be able to commercialize, any of which could have
a material adverse effect on our business and financial condition.

In the U.S., before we are able to market a new medical device, or a new use, claim for, or significant modification to an existing medical device, we

generally must first receive clearance or approval from the FDA and certain other regulatory authorities. Many foreign jurisdictions outside the U.S. also
require clearance, approval or compliance with certain standards before a medical device or other product can be marketed. The process of obtaining regulatory
clearances and approvals to market a medical device can be costly, time consuming, involve rigorous preclinical and clinical testing, require changes in
products or result in limitations on the indicated uses of products. There can be no assurance that these clearances and approvals will be granted on a timely
basis, if at all. In addition, once a medical device has been cleared or approved, a new clearance or approval may be required before the medical device may be
modified, its labeling changed or marketed for a different use. Medical devices are cleared or approved for one or more specific intended uses and promoting a
device for an off-label use could result in government enforcement action. Furthermore, a product approval or clearance can be withdrawn or limited due to
unforeseen problems with the medical device or issues relating to its application. The regulatory clearance and approval process may result in, among other
things, delayed, if at all, realization of product net sales, substantial additional costs and limitations on the types of products we may bring to market or their
indicated uses, any one of which could have a material adverse effect on our business, results of operations, financial condition and cash flows.

A regulatory authority may determine that our products or any of our product candidates have undesirable side effects.

If concerns are raised regarding the safety of a new product candidate as a result of undesirable side effects identified during clinical testing, a regulatory

authority may decline to approve the drug or medical device or issue a letter requesting additional data or information prior to making a final decision regarding
whether or not to approve the product. Undesirable side effects caused by our products or any product candidate could also result in the inclusion of
unfavorable information in our product labeling, imposition of distribution or use restrictions, a requirement to conduct post-market studies or to implement a

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 48

Table of Contents

risk evaluation and mitigation strategy, denial, suspension or withdrawal of regulatory approval by the FDA or other regulatory authorities for any or all
targeted indications, and in turn prevent us from commercializing and generating revenues from the sale of EXPAREL, ZILRETTA, iovera° or any product
candidate.

For example, the side effects observed in the EXPAREL clinical trials completed to date include nausea and vomiting. In addition, the class of drugs that

EXPAREL belongs to has been associated with nervous system and cardiovascular toxicities at high doses. We cannot be certain that these side effects and
others will not be observed in the future, or that regulatory authorities will not require additional trials or impose more severe labeling restrictions due to these
side effects or other concerns. The active component of EXPAREL is bupivacaine, and bupivacaine infusions have been associated with the destruction of
articular cartilage, or chondrolysis. Chondrolysis has not been observed in clinical trials of EXPAREL, but we cannot be certain that this side effect will not be
observed in the future.

Following approval of EXPAREL, ZILRETTA, iovera° or any of our product candidates, if we or others later identify previously unknown undesirable
side effects caused by such products, if known side effects are more frequent or severe than in the past, or if we or others detect unexpected safety signals for
such products or any products perceived to be similar to such products:

•

•

•

regulatory authorities may require the addition of unfavorable labeling statements, specific warnings or contraindications (including boxed
warnings);

regulatory authorities may suspend or withdraw their approval of the product, or require it to be removed from the market;

regulatory authorities may impose restrictions on the distribution or use of the product;

• we may be required to change the way the product is administered, conduct additional clinical trials, reformulate the product, change the labeling

of the product or change or obtain re-approvals of manufacturing facilities;

•

sales of the product may be significantly decreased versus projected sales;

• we may be subject to government investigations, product liability claims and litigation; and

•

our reputation may suffer.

Any of these events could prevent us from achieving or maintaining market acceptance of our products or any of our product candidates and could
substantially increase our commercialization costs and expenses, which in turn could delay or prevent us from generating significant revenues from its sale.

If we do not comply with federal, state and foreign laws and regulations relating to the health care business, we could face substantial penalties.

We and our customers are subject to extensive regulation by the federal government, and the governments of the states and foreign countries in which we

may conduct our business. In the U.S., the laws that directly or indirectly affect our ability to operate our business include the following:

•

•

•

•

•

the Federal Anti-Kickback Law, which prohibits persons from knowingly and willfully soliciting, offering, receiving or providing remuneration—
directly or indirectly—in cash or in kind, to induce either the referral of an individual or furnishing or arranging for a good or service for which
payment may be made under federal health care programs such as Medicare and Medicaid;

other Medicare laws and regulations that prescribe the requirements for coverage and payment for services performed by our customers, including
the amount of such payment;

the Federal False Claims Act, which imposes civil and criminal liability on individuals and entities who submit, or cause to be submitted, false or
fraudulent claims for payment to the government;

the Federal False Statements Act, which prohibits knowingly and willfully falsifying, concealing or covering up a material fact or making any
materially false statement in connection with delivery of or payment for health care benefits, items or services; and

various state laws that impose similar requirements and liability with respect to state healthcare reimbursement and other programs.

If our operations are found to be in violation of any of the laws and regulations described above or any other law or governmental regulation to which we
or our customers are or will be subject, we may be subject to civil and criminal penalties, damages, fines, exclusion from the Medicare and Medicaid programs
and the curtailment or restructuring of our operations. Similarly, if our customers are found to be non-compliant with applicable laws, they may be subject to
sanctions, which could also have a negative impact on us. Any penalties, damages, fines, curtailment or restructuring of our operations would adversely

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 49

Table of Contents

affect our ability to operate our business and our financial results. Any action against us for violation of these laws, even if we successfully defend against it,
could cause us to incur significant legal expenses, divert our management’s attention from the operation of our business and damage our reputation.

The design, development, manufacture, supply and distribution of our products are highly regulated and technically complex.

The design, development, manufacture, supply and distribution of our products are all highly regulated. We, along with our third-party providers, must

comply with all applicable regulatory requirements of the FDA and foreign regulatory authorities. In addition, the facilities used to manufacture, store and
distribute our products are subject to inspection by regulatory authorities at any time to determine compliance with applicable regulations.

The manufacturing techniques and facilities used for the manufacture and supply of our products must be operated in conformity with CGMP and other
FDA, EMA and MHRA regulations, including potentially prior regulatory approval. In addition, any expansion of our existing manufacturing facilities or the
introduction of any new manufacturing facilities, including the manufacturing suites at the Thermo Fisher and Carlisle facilities, also require conformity with
CGMP and other FDA, EMA and MHRA regulations. In complying with these requirements, we, along with our co-production partners and suppliers, must
continually expend time, money and effort in production, record keeping and quality assurance and control to ensure that our products meet applicable
specifications and other requirements for safety, efficacy and quality. In addition, we, along with our co-production partners and suppliers, are subject to
unannounced inspections by the FDA, EMA, MHRA and other regulatory authorities.

Any failure to comply with regulatory and other legal requirements applicable to the manufacture, supply and distribution of our products could lead to

remedial action (such as recalls), civil and criminal penalties and delays in manufacture, supply and distribution of our products.

The design, development, manufacture, supply and distribution of our products are all highly complex. If we are unable to manufacture our products in
compliance with our highly complex specifications in the future, we may be subject to product exchanges, significant costs and charges, supply constraints or
other corrective measures.

If we fail to comply with the extensive regulatory requirements to which we and our products are subject, such products could be subject to restrictions or
withdrawal from the market and we could be subject to penalties.

The testing, manufacturing, quality control, labeling, safety, effectiveness, advertising, promotion, storage, sales, distribution, import, export and
marketing, among other things, of EXPAREL, ZILRETTA, iovera° and our product candidates are subject to extensive regulation by governmental authorities
in the U.S. and elsewhere throughout the world. Quality control and manufacturing procedures regarding our products and product candidates must conform to
CGMP. Regulatory authorities, including but not limited to the FDA, EMA and MHRA, periodically inspect manufacturing facilities to assess compliance with
CGMP. Our failure, or the failure of any contract manufacturers with whom we may work in the future, to comply with the laws administered by the FDA,
EMA, the MHRA or other governmental authorities could result in, among other things, any of the following:

•

•

•

•

•

product recall or seizure;

suspension or withdrawal of an approved product from the market;

interruption of production;

reputational concerns of our customers or the medical community;

operating restrictions;

• warning letters;

•

•

•

•

•

•

•

•

•

injunctions;

refusal to permit import or export of an approved product;

refusal to approve pending applications or supplements to approved applications that we submit;

denial of permission to file an application or supplement in a jurisdiction;

consent decrees;

suspension or termination of ongoing clinical trials;

fines and other monetary penalties;

criminal prosecutions; and

unanticipated expenditures.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 50

Table of Contents

If the government or third-party payers fail to provide adequate coverage and payment rates for EXPAREL, ZILRETTA, iovera° or any future products, or
if hospitals or ASCs choose to use alternative therapies that are less expensive, our revenue and prospects for profitability will be limited.

In both domestic and foreign markets, sales of our existing products and any future products will depend in part upon the availability of coverage and
reimbursement from third-party payers. Such third-party payers include government health programs such as Medicare and Medicaid, managed care providers,
private health insurers and other organizations. Coverage decisions may depend upon clinical and economic standards that disfavor new drug products when
more established or lower cost therapeutic alternatives are already available or subsequently become available. Assuming coverage is approved, the resulting
reimbursement payment rates might not be adequate. In particular, many U.S. hospitals and ASCs receive a fixed reimbursement amount per procedure for
certain surgeries and other treatment therapies they perform. Because this amount may not be based on the actual expenses the hospital or ASC incurs, these
sites may choose to use therapies which are less expensive when compared to our product candidates. Although hospitals and ASCs may receive separate
reimbursement for EXPAREL, ZILRETTA, iovera° or any product candidates that we may develop, in-license or acquire, if approved, will face competition
from other therapies and drugs for these limited hospital and ASC financial resources. We may need to conduct post-marketing studies in order to demonstrate
the cost-effectiveness of any future products to the satisfaction of hospitals, ASCs, other target customers and their third-party payers. Such studies might
require us to commit a significant amount of management time, financial and other resources. Our future products might not ultimately be considered cost-
effective. Adequate third-party coverage and reimbursement might not be available to enable us to maintain price levels sufficient to realize an appropriate
return on investment in product development.

Third-party payers, whether foreign or domestic, or governmental or commercial, are developing increasingly sophisticated methods of controlling
healthcare costs. For example, the 340B Drug Pricing Program requires pharmaceutical manufacturers that participate in Medicaid to enter into a PPA with the
Secretary of Health and Human Services. Under the PPA, the manufacturer agrees to provide front-end discounts on covered outpatient drugs purchased by
specified providers, called “covered entities,” that serve the nation’s most vulnerable patient populations. Any expansion of such covered entities or changes to
the Medicaid rebate formula may cause the required 340B discount to increase, resulting in increased revenue leakage.

Additionally, third-party payers may limit the indications or circumstances for which our products will be reimbursed to a smaller set of indications or
circumstances than we believe is appropriate. In addition, in the U.S., no uniform policy of coverage and reimbursement for drug or medical device products
exists among third-party payers. Therefore, coverage and reimbursement for drug products can differ significantly from payer to payer.

Further, we believe that future coverage and reimbursement will likely be subject to increased restrictions both in the U.S. and in international markets, as

federal, state and foreign governments continue to propose and pass new legislation designed to reduce or contain the cost of healthcare. Third-party coverage
and reimbursement for our products or product candidates for which we receive regulatory approval may not be available or adequate in either the U.S. or
international markets, which could have a negative effect on our business, results of operations, financial condition and prospects.

Public concern regarding the safety of drug products such as EXPAREL and ZILRETTA and medical device products such as iovera° could result in the
inclusion of unfavorable information in our labeling, or require us to undertake other activities that may entail additional costs.

In light of widely publicized events concerning the safety risk of certain drug products, the FDA, members of Congress, the Government Accountability
Office, medical professionals and the general public have raised concerns about potential drug and medical device safety issues. These events have resulted in
the withdrawal of drug and medical device products, revisions to labeling that further limits use of the drug and medical device products and the establishment
of risk management programs that may, for example, restrict distribution of drug or medical device products after approval. The Food and Drug Administration
Amendments Act of 2007, or FDAAA, grants significant expanded authority to the FDA, much of which is aimed at improving the safety of drug and medical
device products before and after approval. In particular, the FDAAA authorizes the FDA to, among other things, require post-approval studies and clinical
trials, mandate changes to product labeling to reflect new safety information and require risk evaluation and mitigation strategies for certain drugs and medical
devices, including certain currently approved drugs and medical devices. The FDAAA also significantly expands the federal government’s clinical trial registry
and results databank, which we expect will result in significantly increased government oversight of clinical trials. Under the FDAAA, companies that violate
these and other provisions of the new law are subject to substantial civil monetary penalties, among other regulatory, civil and criminal penalties. The increased
attention to drug safety issues may result in a more cautious approach by the FDA in its review of data from our clinical trials. Data from clinical trials may
receive greater scrutiny, particularly with respect to safety, which may make the FDA or other regulatory authorities more likely to require additional preclinical
studies or clinical trials. If the FDA or any other regulatory agency requires us to provide additional clinical or preclinical data for EXPAREL, ZILRETTA or
iovera°, the indications for which these products were

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 51

Table of Contents

approved may be limited or there may be specific warnings or limitations on dosing, and our efforts to commercialize EXPAREL, ZILRETTA or iovera° may
be otherwise adversely impacted.

Risks Related to Intellectual Property

The patents and the patent applications that we have covering our pMVL products are limited to specific injectable formulations, processes and uses of
drugs encapsulated in our pMVL drug delivery technology and our market opportunity for our product candidates may be limited by the lack of patent
protection for the active ingredient itself and other formulations and delivery technologies and systems that may be developed by competitors.

The active ingredient in EXPAREL is bupivacaine. Patent protection for the bupivacaine molecules themselves has expired and generic immediate-release
products are available. As a result, competitors who obtain the requisite regulatory approval can offer products with the same active ingredient as EXPAREL so
long as the competitors do not infringe any process, use or formulation patents that we have developed for drugs encapsulated in our pMVL drug delivery
technology.

For example, we are aware of at least one FDA-approved long-acting instillable bupivacaine product on the market which utilizes an alternative delivery

system to EXPAREL. Such a product is similar to EXPAREL in that it also extends the duration of effect of bupivacaine, but achieves this clinical outcome
using a completely different drug delivery system as compared to our pMVL drug delivery technology.

The number of patents and patent applications covering products in the same field as EXPAREL indicates that competitors have sought to develop and

may seek to market competing formulations that may not be covered by our patents and patent applications. The commercial opportunity for EXPAREL could
be significantly harmed if competitors are able to develop and commercialize alternative formulations of bupivacaine that are long-acting but outside the scope
of our patents.

For instance, because EXPAREL has been approved by the FDA, one or more third parties may challenge the patents covering this product, which could

result in the invalidation or unenforceability of some or all of the relevant patent claims. For example, if a third-party files an ANDA for a generic drug product
containing bupivacaine and relies in whole or in part on studies conducted by or for us, the third-party will be required to certify to the FDA that either: (i) there
is no patent information listed in the FDA’s Orange Book with respect to our NDA for EXPAREL; (ii) the patents listed in the Orange Book have expired;
(iii) the listed patents have not expired, but will expire on a particular date and approval is sought after patent expiration or (iv) the listed patents are invalid or
will not be infringed by the manufacture, use or sale of the third-party’s generic drug product. A certification that the new product will not infringe the Orange
Book-listed patents for EXPAREL, or that such patents are invalid, is called a Paragraph IV certification. If the third-party submits a Paragraph IV certification
to the FDA, a notice of the Paragraph IV certification must also be sent to us once the third-party’s ANDA is accepted for filing by the FDA. We may then
initiate a lawsuit to defend the patents identified in the notice. The filing of a patent infringement lawsuit within 45 days of receipt of the notice automatically
prevents the FDA from approving the third-party’s ANDA until the earliest of 30 months or the date on which the patent expires, the lawsuit is settled or the
court reaches a decision in the infringement lawsuit in favor of the third-party. If we do not file a patent infringement lawsuit within the required 45-day period,
the third-party’s ANDA will not be subject to the 30-month stay. Litigation or other proceedings to enforce or defend intellectual property rights are often very
complex in nature, may be very expensive and time-consuming, may divert our management’s attention from our core business and may result in unfavorable
results that could adversely impact our ability to prevent third parties from competing with our products.

In October 2021, we received a Notice Letter advising that eVenus Pharmaceutical Laboratories, Inc., or eVenus, of Princeton, New Jersey, submitted to

the FDA an ANDA with a Paragraph IV certification seeking authorization for the manufacturing and marketing of a generic version of EXPAREL (266 mg/20
mL) in the U.S. prior to the expiration of U.S. Patent No. 11,033,495 (the ’495 patent).

In November 2021, we filed a patent infringement suit against eVenus and its parent company in the U.S. District Court for the District of New Jersey

(21-cv-19829) asserting infringement of the ’495 patent. This triggered an automatic 30-month stay of final approval of the eVenus ANDA. On January 6,
2022, eVenus filed an Answer with counterclaims to the Complaint, alleging the ’495 patent is invalid and/or not infringed through the manufacture, sale, or
offer for sale of the product described in product described in eVenus’s ANDA submission.

In December 2021, we received a second Notice Letter advising that eVenus submitted to the FDA an amendment to its ANDA with a Paragraph IV
Certification seeking authorization for the manufacturing and marketing of a generic version of EXPAREL (133 mg/10 mL) in the U.S. prior to the expiration
of the ’495 patent. In the Notice Letter, eVenus also advised that it submitted a Paragraph IV Certification to the FDA seeking authorization for the
manufacturing and marketing of a generic version of EXPAREL (266 mg/20 mL and 133 mg/10 mL) in the U.S. prior to the expiration of U.S. Patent No.
11,179,336 (the ’336 patent). eVenus further alleges in the Notice Letter that both the ’495 patent and the ’336 patent are invalid and/or not infringed.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 52

Table of Contents

In February 2022, we filed a second patent infringement suit against eVenus and its parent company in the U.S. District Court for the District of New
Jersey (22-cv-00718) asserting that the 133 mg/10 mL ANDA product will infringe the ’495 and ’336 patents and that the 266 mg/20 mL ANDA product will
infringe the ’336 patent. This filing triggered a second automatic 30-month stay of final approval for the 133 mg/10 mL ANDA product.

These litigations are in their early stages, and we are unable to predict their outcome at this time.

The patents and the patent applications that we have covering our iovera° products are primarily limited to specific handheld cryogenic needle devices that
are cooled by a cryogen and methods for applying cryotherapy to nerve tissue using the cryogenic devices. Our market opportunity for our product
candidates may be limited by gaps in patent coverage for the cryogenic devices, methods of use and other cryotherapy technology and systems that may be
developed by competitors.

The iovera° cryogenic device is a compact, self-contained handheld device with a replaceable cryogen cartridge that delivers a cryogen through internal

supply tubes to needle lumens of a replaceable needle probe, so as to cool the needle probe and thereby cool a surrounding target nerve tissue. We also have
secured patents covering particular cryotherapy methods and pain treatments that provide what we deem to be optimal treatment using the iovera° cryogenic
device.

Although we have patents that are broad enough to cover various alternative designs and methods, much of our patent coverage is tailored to cover the

iovera° device and methods of use. It is thus possible that competitors may attempt to design around many of our patents. For example, we are aware of
competitors developing cryogenic systems that are not self-contained handheld devices, or cryogenic systems that deliver cryotherapy through different
mechanisms. It is also possible that competitors may attempt to develop and market cryotherapy devices and methods not covered by our patents, for example,
basic cryotherapy treatment systems that are off-patent or cryoanalgesia for other nerve entrapment treatments.

The commercial opportunity for iovera° could be significantly harmed if competitors are able to develop and commercialize alternative designs and

methods outside the scope of our patents.

Furthermore, the earliest patent family for iovera° is scheduled to expire in 2025, thereby opening the door for competitors to copy some of our early

technology. This early patent family is primarily focused on treating cosmetic defects that are no longer the focus of iovera°, but the underlying technology is
nonetheless relevant enough for there to be appreciable overlap.

Finally, one or more third parties may challenge the patents covering the iovera° product, which could result in the invalidation or unenforceability of
some or all of the relevant patent claims. Litigation or other proceedings to defend or enforce intellectual property rights are often very complex in nature, may
be very expensive and time-consuming, may divert our management’s attention from our core business and may result in unfavorable results that could
adversely impact our ability to prevent third parties from competing with our products.

Because it is difficult and costly to protect our proprietary rights, we may not be able to ensure their protection and all patents will eventually expire.

Our commercial success will depend in part on obtaining and maintaining patent protection and trade secret protection for EXPAREL, ZILRETTA,
iovera°, our pMVL drug delivery technology and for any product candidates that we may develop, license or acquire and the methods we use to manufacture
them, as well as successfully defending these patents and trade secrets against third-party challenges. We will only be able to protect our technologies from
unauthorized use by third parties to the extent that valid and enforceable patents or trade secrets cover them.

The patent positions of pharmaceutical, medical device and biotechnology companies can be highly uncertain and involve complex legal and factual
questions for which important legal principles remain unresolved. No consistent policy regarding the breadth of claims allowed in pharmaceutical, medical
device or biotechnology patents has emerged to date in the U.S. Patent positions and policies outside the U.S. are even more uncertain. Changes in either the
patent laws or in interpretations of patent laws in the U.S. and other countries may diminish the value of our intellectual property. Accordingly, we cannot
predict the breadth of claims that may be allowed or enforced in our patents or in third-party patents.

The degree of future protection for our proprietary rights is uncertain because legal means afford only limited protection and may not adequately protect

our rights or permit us to gain or keep our competitive advantage. For example:

• we may not have been the first to make the inventions covered by each of our pending patent applications and issued patents;

• we may not have been the first to file patent applications for these inventions;

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 53

Table of Contents

•

•

•

•

others may independently develop similar or alternative technologies or duplicate any of our product candidates or technologies;

it is possible that none of the pending patent applications will result in issued patents;

the issued patents covering our product candidates may not provide a basis for commercially viable active products, may not provide us with any
competitive advantages, may not have sufficient scope or strength to protect the technologies they were intended to protect or may be challenged
by third parties;

others may design around our patent claims to produce competitive products that fall outside the scope of our patents;

• we may not develop or in-license additional proprietary technologies that are patentable;

•

•

patents of others may have an adverse effect on our business; or

competitors may infringe our patents and we may not have adequate resources to enforce our patents.

Patent applications in the U.S. are maintained in confidence for at least 18 months after their earliest effective filing date. Consequently, we cannot be
certain we were the first to invent or the first to file patent applications on EXPAREL, ZILRETTA, iovera°, our pMVL drug delivery technology or any product
candidates that we may develop, license or acquire. In the event that a third-party has also filed a U.S. patent application relating to our product candidates or a
similar invention, we may have to participate in interference proceedings declared by the USPTO to determine priority of invention in the U.S. The costs of
these proceedings could be substantial and it is possible that our efforts would be unsuccessful, resulting in a material adverse effect on our U.S. patent
position. Furthermore, we may not have identified all U.S. and foreign patents or published applications that affect our business either by blocking our ability to
commercialize our drugs or medical devices or by covering similar technologies that affect our drug or medical device markets.

In addition, some countries, including many in Europe, do not grant patent claims directed to methods of treating humans, and in these countries patent

protection may not be available at all to protect our product candidates. Even if patents are issued, we cannot guarantee that the claims of those patents will be
valid and enforceable or provide us with any significant protection against competitive products, or otherwise be commercially valuable to us. Furthermore,
while we generally apply for patents in those countries where we intend to make, have made, use or sell patented products, we may not accurately predict all of
the countries where patent protection will ultimately be desirable. If we fail to timely file a patent application in any such country, we may be precluded from
doing so at a later date. We also cannot assure you that the patents issuing as a result of our foreign patent applications will have the same scope of coverage as
our U.S. patents.

Some of our older patents have already expired. In the case of EXPAREL, the European and U.S. patents protecting the formulation of EXPAREL expired

in 2018. An existing formulation patent for EXPAREL expired in November 2013. An existing formulation patent for EXPAREL expired in the U.S. in 2013
and its equivalents in Canada, Germany, France, Spain, Italy and the U.K. expired in 2014. In Europe, manufacturers qualify for 8 years of data exclusivity
upon marketing authorization approval and an additional two years of market exclusivity, for a total of 10 years of regulatory exclusivity. Our earliest patent
family for iovera° is scheduled to expire in 2025. Once our patents covering EXPAREL, ZILRETTA and iovera° have expired, we will be more reliant on trade
secrets to protect against generic competition.

We also rely on trade secrets to protect our technology, particularly where we do not believe patent protection is appropriate or obtainable. However, trade
secrets are difficult to protect. While we use reasonable efforts to protect our trade secrets through confidentiality and non-disclosure agreements, our licensors,
employees, consultants, contractors, outside scientific collaborators and other advisors may unintentionally or willfully disclose our information to competitors.
Policing unauthorized use of our trade secrets or enforcing a claim that a third-party illegally obtained and is using our trade secrets is expensive and time
consuming, and the outcome is unpredictable. In addition, trade secret laws in other countries may not be as protective as they are in the U.S. Thus, courts
outside the U.S. are sometimes less willing to protect trade secrets. Moreover, our competitors may independently develop equivalent knowledge, methods and
know-how.

In order to protect the goodwill associated with our company and product names, we rely on trademark protection for our marks. We have registered the

“Pacira”, “EXPAREL”, “ZILRETTA” and “iovera°” marks with the USPTO. A third-party may assert a claim that one of our marks is confusingly similar to its
mark, and such claims or the failure to timely register a mark or objections by the FDA or other regulatory agency could force us to select a new name for one
of our product candidates, which could cause us to incur additional expense or delay the commercialization of such product.

If we fail to obtain or maintain patent, trade secret and/or trademark protection for EXPAREL, ZILRETTA, iovera°, our pMVL drug delivery technology
or any product candidate that we may develop, license or acquire, third parties could use our proprietary information, which could impair our ability to compete
in the market and adversely affect our ability to generate revenues and remain profitable.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 54

Table of Contents

If we are sued for infringing the intellectual property rights of third parties, it will be costly and time consuming, and an unfavorable outcome in any
litigation would harm our business.

Our ability to develop, manufacture, market and sell EXPAREL, ZILRETTA, iovera°, our pMVL drug delivery technology or any product candidates that

we may develop, license or acquire depends upon our ability to avoid infringing the proprietary rights of third parties. Numerous U.S. and foreign issued
patents and pending patent applications, which are owned by third parties, exist in the general fields of pain management and cancer treatment and cover the
use of numerous compounds, formulations and medical devices in our targeted markets. Because of the uncertainty inherent in any patent or other litigation
involving proprietary rights, we and our licensors may not be successful in defending intellectual property claims by third parties, which could have a material
adverse effect on our results of operations. Regardless of the outcome of any litigation, defending the litigation may be expensive, time-consuming and
distracting to management. In addition, because patent applications can take many years to issue, there may be currently pending applications, unknown to us,
which may later result in issued patents that EXPAREL, ZILRETTA or iovera° may infringe. There could also be existing patents of which we are not aware
that EXPAREL, ZILRETTA or iovera° may inadvertently infringe.

There is a substantial amount of litigation involving patent and other intellectual property rights in the biotechnology, biopharmaceutical and medical

device industries in general. If a third-party claims that we infringe on their products or technology, we could face a number of issues, including:

•

•

•

•

•

infringement and other intellectual property claims which, with or without merit, can be expensive and time consuming to litigate and can divert
management’s attention from our core business;

substantial damages for past infringement which we may have to pay if a court decides that our product infringes on a competitor’s patent;

a court prohibiting us from selling or licensing our product unless the patent holder licenses the patent to us, which it would not be required to do;

if a license is available from a patent holder, we may have to pay substantial royalties or grant cross licenses to our patents; and

redesigning our processes so they do not infringe, which may not be possible or could require substantial expenditures and time.

We may be subject to claims that our employees have wrongfully used or disclosed alleged trade secrets of their former employers.

As is common in the biotechnology, pharmaceutical and medical device industries, we employ individuals who were previously employed at other

biotechnology, pharmaceutical and medical device companies, including our competitors or potential competitors. Although no claims against us are currently
pending, we may be subject to claims that these employees or we have inadvertently or otherwise used or disclosed trade secrets or other proprietary
information of their former employers. Litigation may be necessary to defend against these claims. Even if we are successful in defending against these claims,
litigation could result in substantial costs and be a distraction to management.

Risks Related to our Financial Condition, Indebtedness and our Common Stock

Servicing our indebtedness requires a significant amount of cash, and we may not have sufficient cash flow from our business to pay our substantial
indebtedness.

Our ability to make payments of the principal of, to pay interest on or to refinance our indebtedness, including the Term Loan (as defined below), the
0.750% convertible senior notes due 2025, or 2025 Notes, issued in our private offering completed on July 10, 2020, and Flexion’s 3.375% Convertible Senior
Notes due 2024, or Flexion 2024 Notes, and, together with the 2025 Notes, the Notes, each as described below, or to make cash payments in connection with
any conversion of the 2025 Notes or Flexion 2024 Notes (if applicable) depends on our future performance, which is subject to economic, financial,
competitive and other factors beyond our control. Our business may not generate sufficient cash flow from operations in the future to service our indebtedness
and make necessary capital expenditures. If we are unable to generate such cash flow, we may be required to adopt one or more alternatives, such as selling
assets, restructuring indebtedness or obtaining additional equity capital on terms that may be onerous or highly dilutive. Our ability to refinance our
indebtedness will depend on the capital markets and our financial condition at such time. We may not be able to engage in any of these activities or engage in
these activities on desirable terms, which could result in a default on our debt obligations.

On December 7, 2021, we entered into a credit agreement (the “Credit Agreement”) with JP Morgan Chase Bank, N.A., as administrative agent and the
initial lender. The Credit Agreement provides for a single-advance term loan B facility in the principal amount of $375.0 million (the “Term Loan”), which is
secured by substantially all of our and any subsidiary

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 55

Table of Contents

guarantor’s assets and is scheduled to mature on December 7, 2026, subject to certain exceptions set forth in the Credit Agreement.

On July 10, 2020, we completed a private placement of $402.5 million in aggregate principal amount of 2025 Notes, and entered into an indenture, or
2025 Indenture, with respect to the 2025 Notes. The 2025 Notes accrue interest at a fixed rate of 0.750% per year, payable semiannually in arrears on February
1 and August 1 of each year. The 2025 Notes mature on August 1, 2025.

On May 2, 2017, Flexion issued an aggregate of $201.3 million principal amount of Flexion 2024 Notes, and entered into an indenture, or Flexion 2024

Notes Indenture, as supplemented to date, with respect to the Flexion 2024 Notes, and, together with the 2025 Indenture, the Indentures. The Flexion 2024
Notes accrue interest at a fixed rate of 3.375% per year, payable semiannually in arrears on May 1 and November 1 of each year. As a result of the Flexion
Acquisition, holders of the Flexion 2024 Notes became entitled to certain Flexion Acquisition-related conversion and repurchase rights. Following the
expiration of a Fundamental Change Company Notice and Offer to Purchase the Flexion 2024 Notes in January 2022, there were $8.6 million aggregate
principal amount of Flexion 2024 Notes outstanding. For more information, see Note 11, Debt, to our consolidated financial statements included herein. In
addition, as a result of the Flexion Acquisition and as discussed in more detail below, any future conversion rights are subject to the occurrence of any future
events giving rise to such conversion rights under the Flexion 2024 Notes Indenture. The Flexion 2024 Notes mature on May 1, 2024.

As of December 31, 2022, our total consolidated gross indebtedness was $708.0 million, which consisted of $402.5 million of principal outstanding on
the 2025 Notes, $296.9 million of principal outstanding on the Term Loan and $8.6 million of principal outstanding on the Flexion 2024 Notes. See Note 11,
Debt, to our consolidated financial statements included herein for more information. Additionally, our subsidiaries had no indebtedness (excluding trade
payables, intercompany liabilities and income tax-related liabilities).

Our Credit Agreement and the Indentures each impose significant operating and financial restrictions on us and certain of our subsidiaries, which may
prevent us from capitalizing on business opportunities. A breach of any of those restrictive covenants may cause us to be in default under the Credit
Agreement and/or the Indentures, and our lenders could foreclose on our assets.

Our Credit Agreement requires us to maintain certain financial covenants. A decline in our operating performance could negatively impact our ability to

meet these financial covenants. If we breach any of these restrictive covenants, the lenders could either refuse to lend funds to us or accelerate the repayment of
any outstanding borrowings under the Credit Agreement. We may not have sufficient funds to repay such indebtedness upon a default or be unable to receive a
waiver of the default from the lenders. If we are unable to repay the indebtedness, the lenders could initiate a bankruptcy proceeding or collection proceedings
with respect to our assets, all of which secure our indebtedness under the Credit Agreement.

The Credit Agreement and the Indentures also contain certain restrictive covenants that limit, and in some circumstances prohibit, our ability to, among

other things: incur additional debt or issue preferred stock; sell, lease or transfer our assets; pay dividends on, and make other distributions on, or redeem or
repurchase, our common stock; make certain capital expenditures and investments; guarantee debt or obligations; create certain liens; enter into transactions
with our affiliates; and enter into certain merger, consolidation or other reorganization transactions. These restrictions could limit our ability to obtain future
financing, incur or guarantee additional debt, incur certain liens, enter into transactions with affiliates, transfer or sell certain assets, make acquisitions or
needed capital expenditures, withstand potential downturns in our business, or the economy in general, conduct operations or otherwise take advantage of
business opportunities that may arise, any of which could place us at a competitive disadvantage relative to our competitors. The terms of any future
indebtedness we may incur could include more restrictive covenants. We cannot assure you that we will be able to maintain compliance with these covenants in
the future and, if we fail to do so, that we will be able to obtain waivers from the lenders and/or amend the covenants. Our failure to comply with the restrictive
covenants described above as well as other terms of our indebtedness could result in an event of default, which, if not cured or waived, could result in our being
required to repay these borrowings before their due date. If we are forced to refinance these borrowings on less favorable terms or cannot refinance these
borrowings, our results of operations and financial condition could be adversely affected.

We may not have the ability to raise the funds necessary to settle conversions of the Notes in cash to the extent elected or to repurchase the Notes upon a
fundamental change, and our future indebtedness may contain limitations on our ability to pay cash upon conversion of the Notes or limitations on our
ability to repurchase the Notes.

Holders of the Notes will have the right to require us to repurchase their Notes upon the occurrence of a fundamental change at a repurchase price equal to

100% of their principal amount, plus accrued and unpaid interest, if any. We have the option to pay the principal in cash, shares of our common stock, or any
combination thereof. While it is our intention to pay the principal in cash, upon conversion of the Notes we will be required to make cash payments for each
$1,000 in principal amount

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 56

Table of Contents

of Notes converted of at least the lesser of $1,000 and the sum of the daily conversion values. However, we may not have enough available cash or be able to
obtain financing at the time we are required to make repurchases of Notes surrendered therefor or Notes being converted. The Credit Agreement limits—and
any credit facility or other agreement that we may enter into may limit our ability to make cash payments at the time of a fundamental change or upon
conversion of the Notes. Further, our ability to repurchase the Notes or to pay cash upon conversions of the Notes may be limited by law, by regulatory
authority or by agreements governing our future indebtedness. Our failure to repurchase Notes at a time when the repurchase is required by the applicable
indenture or to pay any cash payable on future conversions of the Notes as required by the Indenture would constitute a default under the applicable indenture.
A default under the applicable indenture or the fundamental change itself could also lead to a default under agreements governing our Credit Agreement or
future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient
funds to repay the indebtedness and repurchase the Notes or make cash payments upon conversions thereof.

Our indebtedness could adversely affect our business, financial condition, and results of operations, as well as the ability to meet payment obligations
under our Credit Agreement and the Notes.

As of December 31, 2022, our total consolidated gross indebtedness was $708.0 million, which consisted of $402.5 million of principal outstanding on
the 2025 Notes, $296.9 million of principal outstanding on the Term Loan and $8.6 million of principal outstanding on the Flexion 2024 Notes. See Note 11,
Debt, to our consolidated financial statements included herein for more information. Subject to the limits contained in the Credit Agreement and the Indentures,
we may be able to incur substantial additional debt from time to time. If we do so, the risks related to our level of debt could increase. Specifically, our level of
debt could have important consequences, including the following:

• making it more difficult for us to meet our obligations with respect to our debt;

• limiting our ability to obtain additional financing to fund future working capital, capital expenditures, acquisitions or other general corporate purposes;

• requiring a substantial portion of our cash flows to be dedicated to debt service payments instead of other purposes, thereby reducing the amount of cash

flows available for future working capital, capital expenditures, acquisitions or other general corporate purposes;

• increasing our vulnerability to general adverse economic and industry conditions;

• exposing us to the risk of increased interest rates as certain of our borrowings are at variable rates of interest;

• placing us at a disadvantage compared to other, less leveraged competitors;

• increasing our cost of borrowing; and

• limiting our flexibility in planning for changes in our business and reacting to changes in the industry in which we compete.

Furthermore, if we are unable to meet our debt service obligations or should we fail to comply with our financial and other negative covenants contained

in the agreements governing our indebtedness, we may be required to refinance all or part of our debt, sell important strategic assets at unfavorable prices, incur
additional indebtedness or issue common stock or other equity securities. We may not be able to, at any given time, refinance our debt, sell assets, incur
additional indebtedness or issue equity securities on terms acceptable to us, in amounts sufficient to meet our needs. If we are able to raise additional funds
through the issuance of equity securities, such issuance would also result in dilution to our stockholders. Our inability to service our obligations or refinance
our debt could have a material and adverse effect on our business, financial condition or operating results. In addition, our debt obligations may limit our ability
to make required investments in capacity, technology, or other areas of our business, which could have a material adverse effect on our business, financial
condition, or operating results.

Any of these factors could have an adverse effect on our business, financial condition and results of operations and our ability to meet our debt payment

obligations.

Despite our current level of indebtedness, we may be able to incur substantially more debt, which could increase the risks to our financial condition
described above.

We may be able to incur substantial additional indebtedness in the future. Although certain of the agreements governing our existing indebtedness contain

restrictions on the incurrence of additional indebtedness and entering into certain types of other transactions, these restrictions are subject to a number of
qualifications and exceptions, including compliance with various financial conditions. Additional indebtedness incurred in compliance with our existing debt
instruments could be substantial. To the extent new debt is added to our current debt levels, the substantial leverage risks described in the immediately
preceding risk factor would increase.

As of December 31, 2022, our total consolidated gross indebtedness was $708.0 million, which consisted of $402.5 million of principal outstanding on

the 2025 Notes, $296.9 million of principal outstanding on the Term Loan and $8.6 million

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 57

Table of Contents

of principal outstanding on the Flexion 2024 Notes. See Note 11, Debt, to our consolidated financial statements included herein for more information on our
indebtedness.

Some provisions of our charter documents and Delaware law may have anti-takeover effects that could discourage an acquisition of us by others, even if an
acquisition would be beneficial to our stockholders, and may prevent attempts by our stockholders to replace or remove our current management.

Provisions in our restated certificate of incorporation and our bylaws, as well as provisions of the Delaware General Corporation Law, or DGCL, could

make it more difficult for a third-party to acquire us or increase the cost of acquiring us, even if doing so would benefit our stockholders, including transactions
in which stockholders might otherwise receive a premium for their shares. These provisions include:

•

•

•

•

authorizing the issuance of “blank check” preferred stock, the terms of which may be established and shares of which may be issued without
stockholder approval;

prohibiting stockholder action by written consent, thereby requiring all stockholder actions to be taken at a meeting of our stockholders;

eliminating the ability of stockholders to call a special meeting of stockholders; and

establishing advance notice requirements for nominations for election to the board of directors or for proposing matters that can be acted upon at
stockholder meetings.

These provisions may frustrate or prevent any attempts by our stockholders to replace or remove our current management by making it more difficult for
stockholders to replace members of our board of directors, which is responsible for appointing the members of our management. In addition, we are subject to
Section 203 of the DGCL, which generally prohibits a Delaware corporation from engaging in any of a broad range of business combinations with an interested
stockholder for a period of three years following the date on which the stockholder became an interested stockholder, unless such transactions are approved by
our board of directors. This provision could have the effect of delaying or preventing a change of control, whether or not it is desired by or beneficial to our
stockholders.

Our common stock price may be subject to significant fluctuations and volatility.

Our stock price is volatile, and from February 3, 2011, the first day of trading of our common stock, to February 27, 2023, the trading prices of our stock

have ranged from $6.16 to $121.95 per share.

Our stock could be subject to wide fluctuations in price in response to various factors, including the following:

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

•

the commercial success of EXPAREL, ZILRETTA and iovera°;

results of clinical trials of our products, product candidates or those of our competitors;

changes or developments in laws or regulations applicable to our products or product candidates;

introduction of competitive products or technologies;

failure to meet or exceed financial projections we provide to the public;

actual or anticipated variations in quarterly operating results;

failure to meet or exceed the estimates and projections of the investment community;

the perception of the pharmaceutical and medical device industry by the public, legislatures, regulators and the investment community;

regulatory concerns or government actions;

general economic and market conditions and overall fluctuations in U.S. equity markets and the impact of macroeconomic developments, such as
general political, health and economic conditions, economic slowdowns, recessions, inflation, rising interest rates and the tightening of credit
markets;

increased interest rates and their generally negative effect on U.S. equity markets;

developments concerning our sources of manufacturing supply;

disputes or other developments relating to patents or other proprietary rights;

additions or departures of key scientific or management personnel;

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

issuances of debt, equity or convertible securities;

changes in the market valuations of similar companies;

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 58

Table of Contents

•

•

evolving investor expectations and concerns regarding environmental, social and corporate governance issues; and

the other factors described in this “Risk Factors” section.

In addition, the stock market in general, and the market for pharmaceutical and biotechnology companies in particular, have experienced extreme price

and volume fluctuations that have often been unrelated or disproportionate to the operating performance of these companies. Broad market and industry factors
may negatively affect the market price of our common stock, regardless of our actual operating performance. Fluctuations in our stock price could, among other
things, adversely impact the trading price of our shares.

We do not intend to pay dividends on our common stock for the foreseeable future.

We have never declared or paid any dividends on our common stock. We currently intend to retain our future earnings to finance the future development
and expansion of our business, and as such we do not expect to pay any cash dividends on our common stock in the foreseeable future. The payment of future
dividends, if any, will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements,
restrictions contained in future financing instruments, provisions of applicable law and any other factors our board of directors deems relevant.

Future sales in the public market or issuances of our common stock could lower the market price for our common stock.

In the future, we may sell additional shares of our common stock to raise capital. Except under limited circumstances, we are not restricted from issuing
additional common stock, including securities that are convertible into or exchangeable for, or that represent the right to receive, common stock. The issuance
of additional shares of our common stock or convertible securities, including upon exercise of our outstanding options, vesting of our restricted stock units or
otherwise, will dilute the ownership interest of our common stockholders. In addition, our stockholders that own 5% or more of the Company may sell a
substantial number of their shares in the public market, which could also affect the market price for our common stock. We cannot predict the size of future
sales or issuances of our common stock or the effect, if any, that they may have on the market price for our common stock. The issuance and/or sale of
substantial amounts of common stock, or the perception that such issuances and/or sales may occur, could adversely affect the market price of our common
stock and impair our ability to raise capital through the sale or issuance of additional equity or debt securities.

Raising additional funds by issuing securities would cause dilution to existing stockholders and raising funds through lending and licensing arrangements
may restrict our operations or require us to relinquish proprietary rights.

To the extent that we raise additional capital by issuing equity securities, our existing stockholders’ ownership would be diluted. If we raise additional
funds through licensing arrangements, it may be necessary to relinquish potentially valuable rights to our potential products or proprietary technologies, or
grant licenses on terms that are not favorable to us. Any debt financing we enter into may involve covenants that restrict our operations. These restrictive
covenants may include limitations on additional borrowing and specific restrictions on the use of our assets as well as prohibitions on our ability to create liens,
pay dividends, redeem our stock or make investments.

Changes in global economic conditions, including, but not limited to, those driven by inflation, may adversely affect spending and the financial health of
our customers and others with whom we do business, which may adversely affect our financial condition, results of operations and cash flows.

Uncertainty about current and future global economic conditions and inflation may cause patients to defer or cancel medical procedures. Our financial
success is sensitive to changes in general economic conditions, both globally and in specific markets, that may adversely affect the demand for our products
including  recessionary  economic  cycles,  higher  interest  rates,  higher  fuel  and  other  energy  costs,  increased  labor  costs,  declines  in  asset  values,  inflation,
increases in commodity prices, higher levels of unemployment, higher consumer debt levels, higher tax rates and other changes in tax laws, public health issues
like the COVID-19 pandemic, or other economic factors, certain of which effects, including cost inflation, we experienced in 2022 and expect to continue to
experience in 2023.

If global economic and financial market conditions deteriorate or remain weak for an extended period of time, the following factors, among others, could

have a material adverse effect on our financial condition, results of operations and cash flows:

•

•

Changes in foreign currency exchange rates relative to the U.S. dollar.

Slower consumer spending that may result in our inability to maintain or increase our sales to new and existing customers, reduce patient
volumes, cause reduced product orders or product order delays or cancellations from wholesale accounts that are directly impacted by fluctuations
in the broader economy, difficulties managing inventories, higher discounts and lower product margins.

• A decrease in liquidity or credit available to our customers, product suppliers and other service providers.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 59

Table of Contents

•

•

If our customers experience diminished liquidity, we may experience a reduction in product orders, an increase in customer order cancellations,
and/or the need to extend customer payment terms, which could lead to larger balances and delayed collection of our accounts receivable, reduced
cash flows, greater expenses for collection efforts and increased risk of nonpayment of our accounts receivable.

If we are unable to mitigate the impact of supply chain constraints and inflationary pressure through price increases or other measures, our results
of operations and financial condition could be negatively impacted. Furthermore, even if we are able to raise the prices of our products, consumers
might react negatively to such price increases, which could have a material adverse effect on, among other things, our brands, reputation, and
sales.

Certain of the foregoing could also result in lower levels of healthcare insurance coverage and/or depress consume confidence, any of which could limit

the ability of some customers to purchase our products and reduce consumer spend on certain elective medical procedures in both the short- and medium-term.

The U.S. Federal Reserve recently raised interest rates multiple times in response to concerns about inflation and it may raise them again. Higher interest

rates, coupled with reduced government spending and volatility in financial markets may also increase economic uncertainty and negatively affect consumer
spending. Similarly, the ongoing war in Ukraine has created extreme volatility in the global capital markets and is expected to continue to have further global
economic consequences, including disruptions of the global supply chain and energy markets. Any such volatility and disruptions may adversely affect our
business or the third parties on whom we rely. If the equity and credit markets deteriorate, including as a result of political unrest or war, it may make any
necessary debt or equity financing more difficult to obtain in a timely manner, or on favorable terms, more costly or more dilutive. Increased inflation rates
have already, and may continue to, adversely affect us by increasing our costs, including labor and employee benefit costs. In addition, higher inflation and
macro turmoil and uncertainty could also adversely affect our customers, which could reduce demand for our products.

Cumulatively, we have incurred significant losses since our inception and may incur additional losses in the future.

To date, we have focused primarily on developing and commercializing EXPAREL, and have since acquired iovera° and ZILRETTA. We recorded net

income of $15.9 million, $42.0 million and $145.5 million for the years ended December 31, 2022, 2021 and 2020, respectively. As of December 31, 2022, we
had an accumulated deficit of $148.8 million. Prior losses, among other things, have had an adverse effect on stockholders’ equity and working capital. We
incurred significant pre-commercialization expenses as we prepared for the commercial launch of EXPAREL, and we incur significant sales, marketing and
manufacturing expenses, as well as continued development expenses related to the commercialization of EXPAREL, ZILRETTA and iovera°. As a result, we
had not been profitable prior to 2015 and were not again until 2020. Because of the numerous risks and uncertainties associated with developing and
commercializing pharmaceutical products and medical devices, we are unable to predict the extent of future losses, if any.

A material impairment in the carrying value of our goodwill or intangible assets could negatively affect our results of operation and financial condition.

A significant portion of our total assets is comprised of goodwill and other intangible assets. Pursuant to U.S. generally accepted accounting principles,
we are required to assess our goodwill and indefinite-lived intangible assets for impairment. Goodwill is not amortized but is subject to impairment testing at
least annually or when a triggering event occurs that could indicate a potential impairment exists. Intangible assets with definite 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 not amortized
and 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. At December 31, 2022, the carrying value of our goodwill was $163.2 million and the
carrying value of our intangible assets, net of accumulated amortization, was $540.5 million. If the carrying value of these assets exceeds their current
estimated fair value, the assets would be considered impaired, and this would result in a noncash charge to our statement of operations, which could be
material. Events and conditions that could result in an impairment include but are not limited to: changes in assumptions regarding future revenue or cash flow
forecasts, a sustained drop in the market price of our common stock, increased competition or loss of market share, obsolescence, product claims that result in a
significant loss of sales or profitability over the product life, deterioration in macroeconomic conditions or declining financial performance in comparison to
projected results.

For example, in 2022, we recognized a $26.1 million impairment charge related to an intangible asset for acquired in-process research and development
related to ZILRETTA for the treatment of OA pain of the shoulder, driven by facts and circumstances revealed in the fourth quarter of 2022 that suggested the
fair value reduction in this intangible asset was driven by later timelines for the completion of clinical trials impacting revenue forecasts, among other factors.
For additional information, see Note 9, Goodwill and Intangible Assets, to our consolidated financial statements included herein. Further

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 60

Table of Contents

changes to the assumptions regarding the future fair values of our goodwill and intangible assets could result in additional impairment charges in the future,
which could be significant.

We may need additional funding and may be unable to raise capital when needed, which would force us to delay, reduce or eliminate our product
development programs or commercialization efforts.

Developing and commercializing products for use in the hospital or ASC settings, conducting clinical trials, establishing outsourced manufacturing

relationships and successfully manufacturing and marketing drugs and medical devices that we may develop is expensive. We may need to raise additional
capital to:

•

•

•

•

•

continue to fund our operations;

continue our efforts to hire additional personnel and build a commercial infrastructure to commercialize EXPAREL, ZILRETTA and iovera°;

qualify, outsource or build additional commercial-scale manufacturing of our products in accordance with CGMP;

in-license and develop additional product candidates; and

refinance our Notes and Term Loan.

We may not have sufficient financial resources to continue our operations or meet all of our objectives, which could require us to postpone, scale back or

eliminate some, or all, of these objectives. Our future funding requirements will depend on many factors, including, but not limited to:

•

•

•

•

•

•

•

•

the costs of maintaining a commercial organization to sell, market and distribute EXPAREL, ZILRETTA and iovera°;

the success of the commercialization of EXPAREL, ZILRETTA and iovera°;

the cost and timing of manufacturing sufficient quantities of EXPAREL, ZILRETTA and iovera° to meet customer demand, including the cost of
expanding our manufacturing facilities to produce EXPAREL, ZILRETTA and iovera°;

the rate of progress and costs of our efforts to prepare for the submission of an IND, NDA, sNDA or 510(k) pre-market notification for any
product candidates that we may develop, in-license or acquire in the future, and the potential that we may need to conduct additional clinical trials
to support applications for regulatory approval;

the costs of filing, prosecuting, defending and enforcing any patent claims and other intellectual property rights associated with our products and
product candidates, including any such costs we may be required to expend if our licensors are unwilling or unable to do so;

the effect of competing technological and market developments;

the terms and timing of any collaborative, licensing, co-promotion or other arrangements that we may establish; and

the potential that we may be required to file a lawsuit to defend our patent rights or regulatory exclusivities from challenges by companies seeking
to market generic versions of extended-release liposome injections of bupivacaine, long-acting injections of triamcinolone or a cryoanalgesic
device that infringes on the various patents covering iovera°.

Future capital requirements will also depend on the extent to which we acquire or invest in additional complementary businesses, products and

technologies.

Unless and until we can generate sufficiently more revenue from our products, we expect to finance or supplement future cash needs through public or

private equity offerings, debt financings, stock option exercises, royalties, collaboration and licensing arrangements, as well as through interest income earned
on our cash and investment balances. If needed, we cannot be certain that additional funding will be available on acceptable terms, or at all. If adequate funds
are not available, we may be required to delay, reduce the scope of, or eliminate one or more of our development programs or our commercialization efforts.

Our quarterly operating results may fluctuate significantly.

We expect our operating results to be subject to quarterly fluctuations. Our operating results will be affected by numerous factors, including:

•

the level of underlying hospital and ASC demand for EXPAREL, ZILRETTA and iovera° and end-user buying patterns;

• maintaining our existing manufacturing facilities for EXPAREL, ZILRETTA and iovera° and expanding their manufacturing capacities;

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 61

Table of Contents

•

•

•

•

•

our execution of other collaborative, licensing, distribution, manufacturing or similar arrangements and the timing of payments we may make or
receive under these arrangements;

variations in the level of expenses related to our future development programs;

any product liability or intellectual property infringement lawsuit in which we may become involved;

regulatory developments, lawsuits and investigations affecting EXPAREL, ZILRETTA, iovera° or the product candidates of our competitors; and

the impact of macroeconomic developments, such as general political, health and economic conditions, including those resulting from the war in
Ukraine, economic slowdowns, recessions, inflation, rising interest rates and tightening of credit markets on our business.

If our quarterly or annual operating results fall below the expectations of our investors or securities analysts, the price of our common stock could
substantially decline. Furthermore, any quarterly or annual fluctuations in our operating results may in turn cause the price of our common stock to fluctuate
substantially. We believe that quarterly comparisons of our financial results are not necessarily meaningful and should not be relied upon as an indication of our
future performance.

We may be unable to successfully integrate the businesses and personnel of acquired companies and businesses, and may not realize the anticipated
synergies and benefits of such acquisitions.

From time to time, we may complete acquisitions of companies and certain businesses of companies, and we may not realize the expected benefits from

such acquisitions because of integration difficulties or other challenges. For example, in April 2019, we completed the MyoScience Acquisition and in
November 2021, we completed the Flexion Acquisition.

The success of any acquisitions will depend, in part, on our ability to realize all or some of the anticipated synergies and other benefits from integrating
the acquired businesses with our existing businesses. The integration process may be complex, costly and time-consuming. The potential difficulties we may
face in integrating the operations of our acquisitions include, among others:

•

•

•

•

•

•

•

•

•

•

•

•

failure to implement our business plans for the combined businesses and consolidation or expansion of production capacity as planned and where
applicable;

unexpected losses of key employees, customers or suppliers of our acquired companies and businesses;

unanticipated issues in conforming our acquired companies’ and businesses’ standards, processes, procedures and internal controls with our
operations;

coordinating new product and process development;

increasing the scope, geographic diversity and complexity of our operations;

diversion of management’s attention from other business concerns;

adverse effects on our or our acquired companies’ and businesses’ existing business relationships;

unanticipated changes in applicable laws and regulations;

risks inherent in our acquired companies’ and businesses’ industry and operations;

unanticipated expenses and liabilities;

potential unfamiliarity with our acquired companies and businesses technology, products and markets, which may place us at a competitive
disadvantage; and

other difficulties in the assimilation of our acquired companies and businesses operations, technologies, products and systems.

If MyoScience, Flexion, or any other acquired companies and businesses have unanticipated or larger than anticipated liabilities for patent and trademark

infringement claims, violations of laws, commercial disputes, taxes and other known and unknown types of liabilities, there may be liabilities that we
underestimated or did not discover in the course of performing our due diligence investigation of our acquired companies and businesses. We may have no
recourse or limited recourse under the applicable acquisition-related agreement to recover damages relating to the liabilities of our acquired companies and
businesses.

We may not be able to maintain or increase the levels of revenue, earnings or operating efficiency that each of the acquired companies and businesses and

Pacira had historically achieved or might achieve separately. In addition, we may not accomplish the integration of any acquired companies and businesses
smoothly, successfully or within the anticipated costs or timeframe. If we experience difficulties with the integration process or if the business of any acquired
companies or businesses deteriorates, the anticipated cost savings, growth opportunities and other synergies of any acquired companies and businesses

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 62

Table of Contents

may not be realized fully or at all, or may take longer to realize than expected. If any of the above risks occur, our business, financial condition, results of
operations and cash flows may be materially and adversely impacted; we may fail to meet the expectations of investors or analysts; and our stock price may
decline as a result.

Our ability to realize the benefits from the Flexion Acquisition is substantially dependent on the commercial success of ZILRETTA and the cost savings
resulting from the timely and effective integration of the operations of Pacira and Flexion.

Our ability to realize the benefits from the Flexion Acquisition is substantially dependent on our ability to successfully commercialize ZILRETTA.
Combining with Pacira may not accelerate the growth and success of ZILRETTA. If we are unsuccessful at convincing health care providers to increase their
rate of adoption of ZILRETTA, our sales could be adversely affected, and our business and financial condition could suffer.

Further, our ability to realize the benefits from the Flexion Acquisition is substantially dependent on the cost savings resulting from the timely and
effective integration of the operations Pacira and Flexion. The process of integrating the operations of Pacira and Flexion could encounter unexpected costs and
delays, which include but are not limited to: the loss of key personnel; the loss of key customers; the loss of key suppliers; integrating the products, services and
related assets, as well as internal controls into our business operations; and unanticipated issues in integrating the sales, marketing and administrative functions.
If we are unable to timely and effectively integrate the operations of Pacira and Flexion, our results of operations could be adversely affected, and our business
could suffer. Further, even if the integration is timely and effective, we may never realize the cost savings expected from the integration and synergies of the
operations of the two companies.

The use of our net operating loss carryforwards and research and development tax credits will be limited.

We have significant federal and state net operating loss, or NOL, carryforwards and federal and state research and development tax credit carryforwards.

Our NOL carryforwards and research and development tax credits may expire and not be used. Our Federal and state NOL carryforwards will begin expiring in
2032 and 2028, respectively, if we have not used them prior to that time. For any federal NOLs generated after December 31, 2017, the NOLs have an
indefinite life and utilization will be subject to a limitation of 80% of taxable income. The non-U.S. NOLs do not expire. Additionally, our ability to use certain
NOLs and credit carryforwards to offset taxable income or tax, respectively, in the future will be limited under Internal Revenue Code Sections 382 and 383
because we experienced cumulative changes in ownership of more than 50% within a three-year period. Such ownership changes were triggered by the
cumulative ownership changes arising as a result of the initial acquisition of the Company’s stock in 2007 and the completion of our initial public offering in
February 2011 and our other financing transactions. Additionally, on November 19, 2021, we completed the Flexion Acquisition which also triggered an
ownership change. Because of these ownership changes, we will be limited regarding the amount of NOL carryforwards and research tax credits that we can
utilize annually in the future to offset taxable income or tax, respectively. Such an annual limitation may significantly reduce the utilization of the NOLs and
research tax credits before they expire. Accordingly, we have not recognized a benefit in our consolidated financial statements for the NOLs and tax credits
which may expire unused.

General Risk Factors

A pandemic, epidemic or outbreak of a contagious disease (such as the novel coronavirus (COVID-19) pandemic), or fear of such an event, could have a
material adverse effect on our business, operating results and financial condition.

A pandemic, epidemic or outbreak of an infectious disease, including the current COVID-19 pandemic, or other public health crisis, could have a material

adverse effect on our business, financial condition and operations, including but not limited to our revenue and cash flows, including potential decreases in
sales, manufacturing issues, supply chain issues, including, but not limited to, staffing shortages, cost inflation and shipping delays, and delays in payments by
our customers. For example, during 2020, our net product sales were negatively impacted by the COVID-19 pandemic due to the significant postponement or
suspension in the scheduling of elective surgical procedures resulting from public health guidance and government directives. Elective surgery restrictions
began to lift on a state-by-state basis in April 2020, allowing our net product sales to return to year-over-year growth in June 2020. However, 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. Furthermore, raw materials and supplies needed to manufacture COVID-19 vaccines have been
backed by government mandate orders, impacting our suppliers’ ability to supply critical raw materials for our products. While these challenges have recently
began to subside, it is unknown how long it will take the elective surgery market to normalize, or if restrictions on elective procedures will recur due to
COVID-19 variant strains or otherwise. We do not know if, and how, future restrictions may affect the surgical communities’ return to, or redefining of, normal
operations, whether due to governmental restrictions, institutional, patient or clinical decisions or general economic conditions. New or prolonged suspensions
of elective surgeries by governmental restrictions or action would cause net sales of our products to decrease. In addition, due to health concerns from the
COVID-19 pandemic or negative economic conditions, patients and clinicians could cancel or defer elective procedures or otherwise avoid medical

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 63

Table of Contents

treatment, which would result in reduced patient volumes and revenues, which could potentially continue over an extended period of time.

Business disruptions could include disruptions or restrictions to our workforce, including the ability of our sales teams to interact with our customers and

healthcare professionals to educate them on the benefits of our products and perform typical sales activities. For example, the ongoing COVID-19 pandemic
had significantly impacted the ability of our sales representatives to access customers and healthcare professionals through personal interactions within the
healthcare setting, including hospitals and ASCs. With the reopening of many states, the ability of our sales representatives to renew their in-person
engagement efforts, in conjunction with remote efforts, has occurred across all sites of care, with more focus on physician offices and ASCs. In addition, any
temporary closures of our manufacturing facilities or the facilities of our suppliers and contract manufacturers (and the resulting impact on production or our
products) or the workforce at such facilities, could cause delays in the shipment or production of our products. If our customers experience disruptions to their
businesses and cash flows, we could experience delays or difficulties with the collection of our accounts receivable. Any sustained impacts and business
disruptions to our facilities or workforce, our customers, our suppliers, or our contract manufacturers would likely adversely impact our cash flows, sales and
operating results.

The significant increase in the number of our employees who are working remotely as a result of the pandemic, and an extended period of remote work

arrangements and subsequent reintroduction into the workplace could introduce operational risk, strain our business continuity plans, negatively impact
productivity and/or collaboration, and give rise to claims by employees or otherwise adversely affect our business. Additionally, the COVID-19 pandemic
could require new or modified processes, procedures and controls to respond to changes in our business environment. We may take further actions as may be
required by government authorities or that we determine are in the best interests of our employees, customers and business partners. There is no certainty that
such measures will be sufficient to mitigate the risks posed by COVID-19.

In addition, the COVID-19 pandemic has, among other things, caused global macroeconomic uncertainty, disrupted consumer spending and supply

chains, contributed to various global shipping delays and port congestions and created significant volatility and disruption of financial markets.

Ultimately, the extent to which COVID-19 or other public health crises could continue to impact our business is difficult to predict and will depend on

many factors beyond our control, including the speed of contagion, the development and implementation of effective preventative measures and possible
treatments, the scope of governmental and other restrictions on elective surgeries, travel and other activity through quarantines/social distancing and other
measures, the timing of effective vaccines becoming widely available and accepted by the public, public reactions to these factors and more.

The extent to which COVID-19 impacts our business, revenues and results of operations will depend on future developments, which are highly uncertain,

constantly changing and cannot be predicted. This includes new information that may emerge concerning the severity of COVID-19, the spread and
proliferation of COVID-19 around the world, the duration of the outbreak and the actions taken to contain COVID-19 or treat its impact, among others.

Environmental, social and corporate governance, or ESG, issues may have an adverse effect on our business, financial condition and results of operations
and damage our reputation.

There is an increasing focus from certain investors, customers, consumers, employees, lawmakers, regulators (such as the SEC) and other stakeholders

concerning ESG matters, including particular focus on climate-related risks. Additionally, public interest and legislative pressure related to public companies’
ESG practices continue to grow. If our ESG practices fail to meet regulatory requirements or investor, customer, consumer, employee or other stakeholders’
evolving expectations and standards for responsible corporate citizenship in areas including environmental stewardship, support for local communities, Board
of Director and employee diversity, human capital management, employee health and safety practices, product quality, supply chain management, corporate
governance and transparency, our reputation, brand and employee retention may be negatively impacted, and our customers and suppliers may be unwilling to
continue to do business with us.

From time to time, we communicate certain ESG initiatives and goals to market participants and our customers and business partners. Any corporate
responsibility disclosure we make may include our policies, practices, initiatives and goals on a variety of social and ethical matters, corporate governance,
environmental compliance, sustainability, employee health and safety practices, human capital management, product quality, supply chain management and
workforce inclusion and diversity. Although we have undertaken significant efforts to improve and implement our ESG initiatives, it is possible that the
aforementioned parties may not be satisfied with such disclosures, our ESG practices or the speed with which we adopt, implement and/or disclose our plans. If
our ESG practices do not meet investor or other stakeholder expectations and standards, which continue to evolve, or if we are perceived or deemed to have not
appropriately responded to the growing concern for ESG issues, regardless of whether there is a legal requirement to do so, we may suffer from reputational
damage from stakeholders and consumers and our business and financial condition could be materially and adversely affected. We may also

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 64

Table of Contents

incur additional costs or require additional resources to monitor such stakeholder expectations and standards and to meet our targets and commitments.

Changes in data privacy and protection laws and regulations, particularly in Europe and the State of California, or any failure to comply with such laws
and regulations, could adversely affect our business and financial results.

We are subject to a variety of continuously evolving and developing laws and regulations globally regarding privacy, data protection and data security,

including those related to the collection, storage, handling, use, disclosure, transfer and security of personal data. Significant uncertainty exists as privacy and
data protection laws may be interpreted and applied differently from country to country and may create inconsistent or conflicting requirements. These laws
apply to transfers of information among our affiliates, as well as to transactions we enter into with third-party vendors.

For example, the E.U. adopted a comprehensive General Data Privacy Regulation, or GDPR, in May 2016 that replaced the then-current E.U. Data

Protection Directive and related country-specific legislation in May 2018. GDPR requires companies to satisfy new requirements regarding the handling of
personal and sensitive data, including its use, protection and the ability of persons whose data is stored to correct or delete such data about themselves. Failure
to comply with GDPR requirements could result in penalties of up to 4% of total worldwide revenue.

Additionally, the California Consumer Privacy Act, or CCPA, became effective in January 2020 and imposed new responsibilities on us for the handling,
disclosure and deletion of personal information for our employees and consumers who reside in California. The CCPA permits California to assess potentially
significant fines for violating CCPA and creates a right for individuals to bring class action suits seeking damages for violations. We have also implemented
more stringent privacy regulations related to the California Privacy Rights Act, which was an amendment to the CCPA.

Furthermore, legislators and regulators in the U.S. are proposing new and more robust cybersecurity rules in light of the recent broad-based cyberattacks

at a number of companies. Our efforts to comply with GDPR, the CCPA and other privacy and data protection laws may impose significant costs and
challenges that are likely to increase over time and may require us to revise certain of our business practices. These and similar initiatives around the world
could increase the cost of developing, implementing or securing our servers and require us to allocate more resources to improved technologies, adding to our
information technology and compliance costs. In addition, enforcement actions and investigations by regulatory authorities related to data security incidents
and privacy violations continue to increase. The enactment of more restrictive laws, rules, regulations, or future enforcement actions or investigations could
impact us through increased costs or restrictions on our business, and noncompliance could result in substantial regulatory penalties and significant legal
liability or litigation related to violation of existing or future data privacy laws and regulations.

Our business and operations would suffer in the event of system failures.

Despite the implementation of security measures, our internal computer systems are vulnerable to damage from computer viruses, human error,

unauthorized access, natural or man-made disasters, intentional acts of vandalism, terrorism, war and network, telecommunication and electrical failures. Any
system failure, accident or security breach that causes interruptions in our operations could result in a material disruption of our manufacturing operations or
product development programs. For example, the loss of clinical trial data from completed clinical trials for our products could result in delays in our
regulatory approval efforts and significantly increase our costs to recover or reproduce the data. To the extent that any disruption or security breach results in a
loss or damage to our data or applications, or inappropriate disclosure of confidential or proprietary information, we may incur liability, reputation damage and
harm to our business operations.

We face risks related to cybersecurity threats and incidents.

We regularly face attempts by others to gain unauthorized access through the internet, or to introduce malicious software, to our Information Technology,
or IT, systems. Individuals or organizations, including malicious hackers and insider threats including employees and third-party service providers, or intruders
into our physical facilities, at times attempt to gain unauthorized access to our software, network and services. We could also be a target of malicious attackers
who attempt to gain access to our network or data centers; steal proprietary information related to our business, products, employees, suppliers and customers;
interrupt our systems and services or those of our suppliers, customers, or others; or demand a ransom to return control of such systems and services. Such
attempts—including but not limited to—social engineering or “phishing” attempts, denial of service attacks and malware (including viruses, trojans and
keyloggers) are increasing in number and in technical sophistication, and, if successful, expose us and any affected parties to risk of loss or misuse of
proprietary or confidential information or disruptions of our business operations, including our manufacturing operations. Our IT infrastructure also includes
services provided by third parties, and these service providers can experience breaches of their systems and products that impact the security of our systems and
our proprietary or confidential information. A substantial breach of our or one of our service providers’ systems could damage our reputation and result in the
loss of revenues or the misuse of confidential data, and we may incur significant expenses to resolve such issues.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 65

Table of Contents

If we do not maintain the privacy and security of personal and business information, we could damage our reputation with customers and employees, incur
substantial additional costs and become subject to litigation.

We receive, retain and transmit personal information about our customers and employees and entrust that information to third-party suppliers, including

cloud service-providers that perform activities for us. Our business depends upon the secure transmission of encrypted confidential information over public
networks, including information permitting payments. A compromise of our security systems or defects within our hardware or software, or those of our
suppliers, that results in our customers’ or employees’ information being obtained by unauthorized persons, could adversely affect our reputation with our
customers and others, as well as our operations, results of operations, financial condition and liquidity, and could result in litigation, government actions, or the
imposition of penalties. In addition, a breach could disrupt our operations and require that we expend significant additional resources related to the security of
our information systems.

The use of data by our business is regulated at the national and state or local level in all of our operating countries. Privacy and information-security laws

and regulations change, and compliance with them may result in cost increases due to, among other things, systems changes and the development of new
processes. If we or those with whom we share information fail to comply with these laws and regulations, our reputation could be damaged, possibly resulting
in lost future business, and we could be subjected to additional legal risk as a result of non-compliance.

We have security measures and controls to protect personal and business information and continue to make investments to secure access to our
information technology network. These measures may be undermined, however, due to the actions of outside parties, employee error, internal or external
malfeasance, or otherwise, and, as a result, an unauthorized party may obtain access to our data systems and misappropriate business and personal information.
Because the techniques used to obtain unauthorized access, disable or degrade service, or sabotage systems change frequently and may not immediately
produce signs of intrusion, we may be unable to anticipate these techniques, timely discover or counter them, or implement adequate preventative measures.
Any such breach or unauthorized access could result in significant legal and financial exposure, damage to our reputation, and potentially have an adverse
effect on our business and results of operations.

Significant changes in the global climate, extreme weather conditions, water availability and other climate related risks could adversely affect our business
or operations.

We could experience adverse impacts to our business if climate change, storms, or other extreme weather conditions and/or water availability challenges

adversely affect our operations or the operations of our suppliers, distributors and customers. There is mounting scientific evidence, as well as concern from the
general public, that emissions of greenhouse gases and contributing human activities have caused and will continue to cause significant changes in global
temperatures and weather patterns and increase the frequency or severity of storms and other weather events, extreme heat, hurricanes, wildfires and flooding.
While such conditions cannot be predicted, if such conditions were to impact our manufacturing sites or otherwise alter production schedules, including those
of our third-party suppliers of raw materials, our manufacturing equipment, or our distributors, we could experience a disruption in the supply of EXPAREL,
ZILRETTA or iovera° to our customers and partners, or we could see an unfavorable impact on the cost or availability of our raw or packaging materials.
Disruptions to the operations of our customers could also adversely impact the demand for our products. Regulations in response to climate change could result
in increased manufacturing costs associated with increased compliance and water and energy costs.

The effects of climate change, natural disasters such as earthquakes, wildfires, hurricanes, tornadoes, tsunamis or other adverse weather events and

climate conditions, whether occurring in the U.S. or abroad, and the consequences and effects thereof, including damage to our supply chain, such as
availability of raw materials, increased manufacturing costs and disruptions to productivity of our manufacturing operations, changes in consumer preferences
or spending priorities, and energy shortages, have in the past and could in the future harm or disrupt our operations or the operations of our vendors, other
suppliers, or customers, or result in economic instability that may negatively impact our operating results and financial condition. Additionally, certain
catastrophes may not be covered by our general insurance policies, which could result in significant unrecoverable losses. Many governmental and other
regulatory bodies worldwide are enacting regulations to mitigate the impacts of climate change. If we, our suppliers, or others in our supply chain are required
to comply with these laws and regulations, or if we choose to take additional voluntary steps to reduce or mitigate our impact on the climate, we may
experience increased costs for energy, production, transportation and raw materials, increased capital expenditures, or increased insurance premiums and
deductibles, each of which could adversely impact our operations. In addition, inconsistent regulations among jurisdictions may also affect our cost to comply
with such laws and regulations. Any assessment of the potential impact of future climate change legislation, regulations or industry standards, as well as any
international treaties and accords, is uncertain given the wide scope of potential regulatory change in the countries in which we operate.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 66

Table of Contents

Our international operations expose us to numerous and sometimes conflicting legal and regulatory requirements, the compliance of which could be costly
and time consuming and violation of these regulations could adversely affect our business or operations.

We are subject to numerous, and sometimes conflicting, legal requirements on matters as diverse as pharmaceutical and medical device marketing,
product liability, anti-corruption, data protection and privacy, compliance, taxation, accounting and financial reporting, employment laws, wage-and-hour
standards, labor relations and human rights, among others. The global nature of our operations may increase the difficulty and cost of compliance with various
regulations and laws, as compliance with diverse legal requirements is costly, time-consuming and requires significant resources. Violations of one or more of
these regulations in the conduct of our business could result in significant fines, enforcement actions or criminal sanctions against us and/or our employees,
prohibitions on doing business and damage to our reputation.

In addition to these legal and regulatory requirements, there are risks inherent in doing business internationally, including but not limited to:

•

•

•

•

•

•

•

•

•

•

•

•

•

•

different or more restrictive privacy, data protection, data localization, and other laws that could require us to make changes to our products, services
and operations, such as mandating that certain types of data collected in a particular country be stored and/or processed within that country;

difficulties in developing, staffing, and simultaneously managing our foreign operations as a result of geographic distance, language, and cultural
differences;

stringent local labor laws and regulations;

profit repatriation and foreign currency exchange restrictions;

geopolitical events, including natural disasters, acts of war and terrorism, and public health emergencies, including divergent governmental responses
thereto across the jurisdictions in which we operate;

import or export regulations;

compliance with the U.S. Foreign Corrupt Practices Act, the U.K. Bribery Act, and laws and regulations of other jurisdictions prohibiting corrupt
payments to government officials and other third parties;

antitrust and competition regulations;

delays associated with the manufacture, transportation and delivery of products, including delays related to global port backlog or congestion;

increased transportation costs due to distance, energy prices, inflation or other factors;

potentially adverse tax developments;

trade barriers and changes in trade regulations;

political or social unrest, including but not limited to the war in Ukraine, economic instability, repression, or human rights issues; and

risks related to other government regulation or required compliance with local laws.

In  addition,  we  are  subject  to  customs  laws  and  regulations  with  respect  to  our  export  and  import  activity,  which  are  complex  and  vary  within  legal
jurisdictions in which we operate. We cannot ensure that there will not be a control failure around customs enforcement despite the precautions we take. We are
currently  subject  to  audits  by  customs  authorities.  Any  failure  to  comply  with  customs  laws  and  regulations  could  be  discovered  during  a  U.S.  or  foreign
government customs audit, or customs authorities may disagree with our tariff treatments, and such actions could result in substantial fines and penalties, which
could have an adverse effect on our business and financial results. In addition, changes to U.S. trade laws may adversely impact our operations. These changes
and any changes to the trade laws of other countries may add additional compliance costs and obligations and subject us to significant fines and penalties for
non-compliance.  Compliance  with  these  and  other  foreign  legal  regimes  may  have  a  material  adverse  impact  on  our  business  and  results  of  operations.
Furthermore, as a global company, we are subject to foreign and U.S. laws and regulations designed to combat governmental corruption, including the U.S.
Foreign Corrupt Practices Act and the U.K. Bribery Act. Violations of these laws and regulations could result in fines and penalties; criminal sanctions against
us, our directors, our officers, or our employees; prohibitions on the conduct of our business and on our ability to offer our products and services in one or more
countries; and a materially negative effect on our brands and our operating results. Although we have implemented policies and procedures designed to ensure
compliance  with  these  foreign  and  U.S.  laws  and  regulations,  including  the  U.S.  Foreign  Corrupt  Practices  Act  and  the  U.K.  Bribery  Act,  there  can  be  no
assurance that our employees, business partners, or agents will not violate our policies.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 67

Table of Contents

Item 1B.    Unresolved Staff Comments

None.

Item 2.    Properties

We occupy three facilities totaling approximately 195,000 square feet at our Science Center Campus in San Diego, California. We use these facilities for

research and development, manufacturing, general and administrative purposes and the storage of inventory and raw materials. Our manufacturing facility
where we produce EXPAREL and iovera° handpieces and our mixed-use research and development property leases both expire in June 2030 and our
warehouse lease expires in August 2030. The Pacira Innovation and Training center at Tampa in Tampa, Florida, is an approximately 13,000 square-foot
facility that supports a full range of educational events to advance clinician understanding of the latest local, regional and field block approaches for managing
pain and reducing or eliminating exposure to opioids. Our principal executive offices and corporate headquarters are also located at the PIT of Tampa, and our
lease expires in December 2026. The Houston Pacira Innovation and Training Center in Houston, Texas, is an approximately 19,000 square-foot facility
similar to the PIT of Tampa, but that also features advanced ultrasound machines equipped with artificial intelligence, 3-D training software and professional
medical lighting and in-ceiling cameras, both wet and dry laboratory space and a 125-seat lecture hall. The lease for the PIT of Houston expires in October
2027.

In addition, we maintain an administrative, commercial and business development office in Parsippany, New Jersey, where we occupy approximately
53,000 square feet under a lease expiring in March 2028. As part of the Flexion Acquisition, we assumed leases for approximately 42,000 square feet of office
space in Burlington, Massachusetts under a lease that expires in April 2025 and is being partially subleased and approximately 5,300 square feet of laboratory
space in Woburn, Massachusetts under a lease that expires in February 2024 and is being fully subleased.

We believe that our research and development and manufacturing facilities at our Science Center Campus, Thermo Fisher and Carlisle sites (as discussed
in Item 1—Business above) will be sufficient for our commercial and pipeline development needs. We also may add new facilities or expand existing facilities
as we add employees, expand our geographic markets and if demand for EXPAREL, ZILRETTA and iovera° increases and we believe that suitable additional
or substitute space will be available as needed to accommodate any such expansion of our operations.

Item 3.    Legal Proceedings

For information related to Item 3. Legal Proceedings, refer to Note 20, Commitments and Contingencies, to our consolidated financial statements included

herein.

Item 4.    Mine Safety Disclosures

Not applicable.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 68

Table of Contents

PART II

Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

Our common stock is listed and traded under the ticker symbol “PCRX” on the Nasdaq Global Select Market. As of February 27, 2023, we had 11 holders

of record of our common stock. The number of record holders is based on the actual number of holders registered on the books of our transfer agent and does
not reflect the substantially greater amount of holders of shares in “street name”, whose shares are held of record by banks, brokers and other financial
institutions.

Performance Graph

The following graph shows the value of an investment of $100.00 made on December 29, 2017—the last trading day of 2017—in each of Pacira
BioSciences, Inc. (PCRX), the Nasdaq Composite Index (^IXIC), the Nasdaq Biotechnology Index (^NBI) and the S&P Pharmaceuticals Select Index
(^SPSIPH). The three indices included are for comparative purposes only and do not necessarily reflect management’s opinion that such indices are an
appropriate measure of the relative performance of our common stock. All results assume the reinvestment of dividends, if any, and are calculated as of
December 31  of each year. The historical stock price performance of our common stock and the indices shown in this performance graph is not necessarily
indicative of future stock price performance.

st

Comparison of Five-Year Cumulative Total Returns
Among Pacira BioSciences, Inc., the Nasdaq Composite Index,
the Nasdaq Biotechnology Index and the S&P Pharmaceuticals Select Index

Pacira BioSciences, Inc. (PCRX)
Nasdaq Composite Index (^IXIC)
Nasdaq Biotechnology Index (^NBI)
S&P Pharmaceuticals Select Index (^SPSIPH)

Dividend Policy

Cumulative Total Return as of December 31,

2017

2018

2019

2020

2021

2022

$
$
$
$

100.00  $
100.00  $
100.00  $
100.00  $

94.24  $
96.12  $
90.68  $
84.29  $

99.23  $
129.97  $
112.81  $
105.16  $

131.08  $
186.69  $
141.78  $
119.45  $

131.81  $
226.63  $
140.88  $
106.02  $

84.58 
151.61 
125.52 
94.15 

We have never declared or paid any dividends on our common stock. We currently intend to retain any future earnings to finance the future development
and expansion of our business, and as such we do not expect to pay any cash dividends on our common stock in the foreseeable future. The payment of future
dividends, if any, will be at the discretion of our board of directors and will depend on our financial condition, results of operations, capital requirements,
restrictions contained in the agreements governing our indebtedness, provisions of applicable law and any other factors our board of directors deems relevant.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 69

Table of Contents

Item 6.    Reserved

Item 7.    Management’s Discussion and Analysis of Financial Condition and Results of Operations

Management’s Discussion and Analysis of Financial Condition and Results of Operations is based upon our consolidated financial statements, which have

been prepared in accordance with generally accepted accounting principles in the United States of America, or GAAP, and in accordance with the rules and
regulations of the United States Securities and Exchange Commission, or SEC. We operate and report our financial information in one segment. The following
discussion of our financial condition and results of operations should be read in conjunction with the other sections of this Annual Report, including our
consolidated financial statements and the notes to those consolidated financial statements appearing in Part IV, Item 15, of this Annual Report. This discussion
contains forward-looking statements that involve significant risks and uncertainties. As a result of many factors, such as those set forth under “Risk Factors” in
Part I, Item 1A. of this Annual Report, our actual results may differ materially from those anticipated in these forward-looking statements. Certain defined
terms have been brought forward from Part I of this Annual Report.

This section of this Annual Report discusses year-to-year comparisons between 2022 and 2021, as well as other discussions of 2022 and 2021 items. We
have omitted discussion of the year ended December 31, 2020 (the earliest of the three years covered by our consolidated financial statements presented in this
Annual Report) as permitted by SEC regulations. The complete Management’s Discussion and Analysis of Financial Condition and Results of Operations for
year-to-year comparisons between 2021 and 2020 and other discussions of 2020 items can be found within Part II, Item 7, to our Annual Report for the year
ended December 31, 2021, filed with the SEC on February 28, 2022, which is available on the SEC’s website at www.sec.gov and our corporate website at
www.pacira.com. The foregoing reference to our corporate website is not intended to, nor shall it be deemed to, incorporate information on our corporate
website into this Annual Report by reference, and the inclusion of our website address in this Annual Report is an inactive textual reference only and is not
intended to be an active link to our corporate website.

Overview

Pacira is the industry leader in our commitment to non-opioid pain management and providing a non-opioid option to as many patients as possible to
redefine the role of opioids as rescue therapy only. We are also developing innovative interventions to address debilitating conditions involving the sympathetic
nervous system, such as cardiac electrical storm, chronic pain and spasticity. Our long-acting, local analgesic EXPAREL  (bupivacaine liposome injectable
suspension) was commercially launched in April 2012. EXPAREL utilizes our unique pMVL drug delivery technology that encapsulates drugs without altering
their molecular structure and releases them over a desired period of time. In the U.S., EXPAREL is the only opioid-free, long-acting local and regional
analgesic approved for infiltration, field blocks and interscalene brachial plexus nerve block to produce local or regional postsurgical analgesia. EXPAREL is
also approved for infiltration in pediatric patients aged six years and older in the U.S. In Europe, EXPAREL is approved as a brachial plexus block or femoral
nerve block for treatment of post-operative pain in adults, and as a field block for treatment of somatic post-operative pain from small- to medium-sized
surgical wounds in adults and children aged six years and older. Since its initial approval in 2011, more than 12 million patients have been treated with
EXPAREL. We drop-ship EXPAREL directly to end-users based on orders placed to wholesalers or directly to us, and there is no product held by wholesalers.
With the acquisition of Flexion Therapeutics, Inc. (the “Flexion Acquisition”) in November 2021, we acquired ZILRETTA  (triamcinolone acetonide
extended-release injectable suspension), the first and only extended-release, intra-articular therapy that can provide major relief for OA knee pain for three
months and has the potential to become an alternative to hyaluronic acid, or HA, and platelet rich plasma, or PRP, injections or other early intervention
treatments. With the acquisition of MyoScience, Inc. (the “MyoScience Acquisition”) in April 2019, we acquired iovera° , a handheld cryoanalgesia device
used to deliver a precise, controlled application of cold temperature to targeted nerves, which we sell directly to end users. EXPAREL, ZILRETTA and the
iovera° system are highly complementary products as long-acting, non-opioid therapies that alleviate pain.

®

®

®

We expect to continue to pursue the expanded use of EXPAREL, ZILRETTA and iovera° in additional procedures; progress our earlier-stage product
candidate pipeline; advance regulatory activities for EXPAREL, ZILRETTA, iovera° and our other product candidates; invest in sales and marketing resources
for EXPAREL, ZILRETTA and iovera°; expand and enhance our manufacturing capacity for EXPAREL, ZILRETTA and iovera°; invest in products,
businesses and technologies; and support legal matters.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 70

Table of Contents

Flexion Acquisition

In November 2021, we completed the Flexion Acquisition pursuant to the Flexion Merger Agreement, under which Flexion became our wholly owned

subsidiary and added ZILRETTA, a non-opioid corticosteroid that employs a proprietary microsphere technology to provide extended pain relief, to our
commercial offering. The addition of ZILRETTA to our innovative non-opioid product portfolio directly aligns with our mission to provide an opioid
alternative to as many patients as possible and address medical needs along the neural pain pathway.

The total consideration of $578.8 million included an initial payment of $428.3 million which represented $8.50 in cash per share of Flexion common

stock, $20.2 million paid to settle restricted stock units and in-the-money stock options, an $85.1 million cash payment of Flexion debt not assumed by us and
$45.2 million in contingent consideration representing the fair value of contingent value rights, or CVRs, that were issued in conjunction with the Flexion
Acquisition. The Flexion Merger Agreement provided for one non-tradeable CVR per share of Flexion common stock as well as one CVR per share for certain
Flexion equity awards. Each CVR entitles Flexion shareholders to contingent milestone payments of up to an aggregate of $8.00 in cash per share of Flexion
common stock if certain milestones are met on or prior to December 31, 2030. At the date of the Flexion Acquisition, we 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. The fair value of the contingent
consideration related to the Flexion Acquisition is revalued each reporting period if and until the related contingencies are resolved. For more information, see
Note 5, Flexion Acquisition, to our consolidated financial statements included herein.

Recent Highlights

•

•

•

•

In January 2023, we submitted our sNDA to the FDA seeking expansion of the EXPAREL label to include sciatic nerve blocks in the popliteal fossa
and femoral nerve blocks in the adductor canal, with an anticipated FDA action date under the Prescription Drug User Fee Act in the second half of
2023. The sNDA is supported by two successful Phase 3 studies in which EXPAREL achieved statistically significant reductions in postsurgical pain
control and opioid consumption through 96 hours compared with bupivacaine HCl.

In January 2023, we opened our second Innovation and Training Center in Houston. This state-of-the-art facility features a 125-seat adaptive lecture
hall, broadcast studio and both wet and dry lab space for cadaver and other interactive workshops, as well as advanced ultrasound machines equipped
with artificial intelligence training software. This training center is core to developing physician thought leaders and community-based clinicians
wanting to stay at the forefront of opioid-sparing pain management.

In November 2022, both the EMA’s CHMP and the MHRA approved marketing authorization for an expanded indication of EXPAREL to include use
in children aged 6 years and older as a field block for the treatment of somatic post-operative pain from small- to medium-sized surgical wounds. The
approval was based on the results of our Phase 3 PLAY study of EXPAREL infiltration in pediatric patients undergoing spinal or cardiac surgeries.
Overall findings were consistent with the pharmacokinetic and safety profiles for adult patients with no safety concerns identified at a dose of 4
mg/kg. The EMA’s approval is applicable to all 27 E.U. member states plus Iceland, Norway and Liechtenstein, and the MHRA’s approval is
applicable in the U.K. EXPAREL was initially approved by the EC and in the U.K. in November 2020 as a brachial plexus block or femoral nerve
block for treatment of post-operative pain in adults, and as a field block for treatment of somatic post-operative pain from small- to medium-sized
surgical wounds in adults.

In October 2022, the USPTO issued patent number 11,452,691. This patent is a chemical composition patent, with an expiration date of January 22,
2041. This patent is now listed in the FDA’s Orange Book and is the eighth listed patent. The company also received a Notice of Allowance from the
USPTO for a U.S. Patent Application that is a product by process patent for EXPAREL. After issuance, Pacira will submit this patent for listing in the
Orange Book.

Coronavirus (COVID-19) Pandemic and Global Economic Conditions

Since early 2020, our 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. Direct and indirect effects of the pandemic and
global economic conditions have and may continue to negatively impact our business, financial condition and results of operations. Such impacts may include
the effect of prolonged periods of inflation and rising interest rates on our

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 71

Table of Contents

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

We continue to actively monitor the situation and will implement measures recommended by federal, state or local authorities, or that we determine are in
the best interests of our patients, employees, partners, suppliers, shareholders and stakeholders. For a description of risks facing the Company that relate to the
COVID-19 pandemic or any other future pandemic, epidemic or outbreak of contagious disease, see Item 1A. “Risk Factors” in this Annual Report.

Results of Operations

Comparison of the Years Ended December 31, 2022 and 2021

Revenues

Net product sales consist of sales of (i) EXPAREL in the U.S., E.U. and U.K.; (ii) ZILRETTA in the U.S.; (iii) iovera° in the U.S., Canada and the E.U.;

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

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

Net product sales:

(1)

EXPAREL
ZILRETTA 
iovera°
Bupivacaine liposome injectable suspension

Total net product sales
Royalty revenue
Collaborative licensing and milestone revenue

Total revenues

Year Ended December 31,

2022

2021

% Increase /
(Decrease)

$

$

536,899  $
105,517 
15,258 
6,476 
664,150 
2,673 
— 
666,823  $

506,515 
12,683 
16,162 
3,606 
538,966 
2,442 
125 
541,533 

6%
100% +
(6)%
80%
23%
9%
(100)%

23%

(1) ZILRETTA net product sales for the year ended December 31, 2021 were attributable to the period beginning November 19, 2021, the date of the Flexion Acquisition.

EXPAREL net product sales increased 6% in 2022 compared to 2021, primarily due to increases of 5.5% in gross vial volume and increases of 3.6% in

gross selling price per unit, partially offset by the sales mix of EXPAREL vial sizes and higher gross to net adjustments primarily due to our participation in
340B drug pricing and other strategic partnerships. Although the demand for EXPAREL has continued to increase primarily as a result of ASCs and
anesthesiologists broadening the use of long-acting EXPAREL regional approaches as a foundation of multimodal opioid-minimization strategies that enable
shifting inpatient procedures to 23-hour sites of care, the elective surgery market has faced post-pandemic-related challenges due to regional surges in COVID-
19 variant cases, staffing shortages and fatigue from care teams and economic and inflationary pressures on consumer confidence. EXPAREL utilization
remains above the overall sharp decline in elective surgical procedures relative to pre-pandemic baseline levels due to increased utilization in outpatient settings
and emergent procedures.

As a result of the Flexion Acquisition in November 2021, we acquired ZILRETTA. We recognized net product sales of $105.5 million and $12.7 million

for the years ended December 31, 2022 and 2021, respectively. Net product sales during the year ended December 31, 2021 were attributable to the period
beginning on November 19, 2021, the closing date of the Flexion Acquisition.

Net product sales of iovera° decreased 6% in 2022 versus 2021 primarily due to a delay in the transition from generation 1 to generation 2 iovera°

products and short-term variations in reimbursement policies in certain territories. We have seen the greatest iovera° demand as a pain relief for patients in
advance of TKA procedures and in chronic pain management, particularly for people with mild to severe OA of the knee.

Bupivacaine liposome injectable suspension revenue increased 80% in 2022 versus 2021, and its related royalties increased 9%, primarily due to the sales

mix of vial sizes of orders placed for veterinary use.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 72

 
 
 
 
 
Table of Contents

Any renewed government suspension of or reluctance of patients to have elective procedures would impact our future sales of EXPAREL, ZILRETTA

and iovera° during the lingering effects and uncertainty surrounding the ongoing COVID-19 pandemic and the impact of economic conditions including
inflation on consumers' healthcare choices.

Cost of Goods Sold

Cost of goods sold primarily relates to the costs to produce, package and deliver our products to customers. These expenses include labor, raw materials,

manufacturing overhead and occupancy costs, depreciation of facilities, royalty payments, quality control and engineering.

The following table provides information regarding cost of goods sold and gross margin during the years indicated, including percent changes (dollar

amounts in thousands):

Cost of goods sold
Gross margin

Year Ended December 31,

2022

2021

$

199,295  $

140,255 

70%

74%

% Increase /
(Decrease)
42%

Gross margin decreased four percentage points in 2022 as compared to 2021 due to higher inventory reserves, accelerated depreciation for certain
machinery and equipment for which no future economic benefit was identified and the ZILRETTA step-up of fixed assets and inventory to fair value in
accordance with purchase accounting, partially offset by unplanned downtime in the prior period.

Research and Development Expenses

Research and development expenses primarily consist of costs related to clinical trials and related outside services, product development and other

research and development costs, including trials that we are conducting to generate new data for EXPAREL, ZILRETTA and iovera° and stock-based
compensation expense. Clinical and preclinical development expenses include costs for clinical personnel, clinical trials performed by third-parties, toxicology
studies, materials and supplies, database management and other third-party fees. Product development and manufacturing capacity expansion expenses include
development costs for our products, which include personnel, equipment, materials and contractor costs for process development and product candidates,
development costs related to significant scale-ups of our manufacturing capacity and facility costs for our research space. Regulatory and other expenses
include regulatory activities related to unapproved products and indications, medical information expenses and related personnel. Stock-based compensation
expense relates to the costs of stock option grants, awards of restricted stock units, or RSUs, and our employee stock purchase plan, or ESPP.

The following table provides a breakout of our research and development expenses during the years indicated, including percent changes (dollar amounts

in thousands):

Clinical and preclinical development
Product development and manufacturing capacity expansion
Regulatory and other
Stock-based compensation

Total research and development expense

% of total revenue

Year Ended December 31,

2022

2021

$

$

45,615  $
24,635 
7,953 
6,594 
84,797  $

13%

10%

% Increase /
(Decrease)
89%
27%
21%
21%

53%

24,138 
19,352 
6,590 
5,465 
55,545 

Total research and development expense increased 53% in 2022 as compared to 2021.

Clinical and preclinical development expense increased 89% in 2022 versus 2021 due to ongoing expenses and completion of two EXPAREL lower

extremity nerve block trials in bunionectomy and TKA, ongoing trials for the product candidates acquired as part of the Flexion Acquisition and toxicology
studies for product development candidates. The prior year was affected by clinical trial delays related to the COVID-19 pandemic, whereas the current year
included an expanded product candidate pipeline internally and as a result of the Flexion Acquisition, including ongoing expenses for PCRX-201, an IA gene
therapy candidate for OA.

Product development and manufacturing capacity expansion expense increased 27% in 2022 versus 2021 mainly attributable to the significant scale-up of

our EXPAREL manufacturing capacity at our Science Center Campus in San Diego, California.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 73

 
 
 
 
Table of Contents

Regulatory and other expenses increased 21% in 2022 versus 2021 in support of the E.U. EXPAREL pediatric submission and in the U.S., the sNDA for
lower extremity nerve block, which we submitted to the FDA in January 2023 seeking expansion of the EXPAREL label to include femoral nerve block in the
adductor canal and sciatic nerve block in the popliteal fossa.

Stock-based compensation increased 21% in 2022 versus 2021 primarily due to an increase in the amount of equity awards outstanding for research and

development personnel.

We expect that research and development costs for 2023 will be modestly lower than 2022, with a focus on ZILRETTA, iovera°, PCRX-201 and PCRX-

401. We believe ZILRETTA’s extended-release profile may provide effective treatment for OA pain of the shoulder and intend to initiate a Phase 3 trial
investigating ZILRETTA in shoulder OA. We also intend to initiate an OA Knee safety study of ZILRETTA in patients with Type 2 diabetes and a Phase 3 trial
investigating iovera° in patients with spasticity, as well as plan to submit an IND application for PCRX-401 to initiate a Phase 1 trial for low back pain.

Selling, General and Administrative Expenses

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

and scientific affairs operations, expenses related to communicating the health outcome benefits of our products, investments in provider-level market access
and patient reimbursement support and educational programs for our customers. General and administrative expenses consist of compensation and benefits for
legal, finance, regulatory activities related to approved products and indications, compliance, information technology, human resources, business development,
executive management and other supporting personnel. It also includes professional fees for legal, audit, tax and consulting services. Stock-based compensation
expense relates to the costs of stock option grants, RSU awards and our ESPP.

The following table provides information regarding selling, general and administrative expenses during the years indicated, including percent changes

(dollar amounts in thousands):

Sales and marketing
General and administrative
Stock-based compensation

Total selling, general and administrative expenses

% of total revenue

Year Ended December 31,

2022

2021

$

$

144,996  $
73,989 
35,531 
254,516  $

111,022 
57,433 
30,890 
199,345 

38%

37%

% Increase /
(Decrease)
31%
29%
15%

28%

Total selling, general and administrative expenses increased 28% in 2022 as compared 2021.

Sales and marketing expense increased 31% in 2022 versus 2021, driven by a sales force expansion supporting both ZILRETTA and iovera° following the
completion of the Flexion Acquisition in November 2021 and fully staffing a contracted sales force in Europe for EXPAREL. Increases also included expenses
for patient reimbursement support for ZILRETTA. We are continuing our marketing investment in our products, which includes educational initiatives and
programs related to the impact of opioids and postsurgical pain management and our national advocacy campaign designed to educate patients about non-
opioid treatment options. Additionally, we continued our investment in clinician training in the use of EXPAREL and iovera° at our PIT of Tampa. The addition
of ZILRETTA to our commercial portfolio provides clinicians with two unique OA treatment options to individualize patient care.

General and administrative expense increased 29% in 2022 versus 2021, driven by administrative support costs as a result of the Flexion Acquisition in

November 2021, including transition expenses during integration, legal costs including intellectual property protection and additional support for our expansion
into European markets.

Stock-based compensation increased 15% in 2022 versus 2021, primarily due to the number of equity awards outstanding for selling, general and

administrative personnel and accelerated stock-based compensation expense.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 74

 
 
Table of Contents

Amortization of Acquired Intangible Assets

The following table provides a summary of the amortization of acquired intangible assets during the years indicated, including percent changes (dollar

amounts in thousands):

Amortization of acquired intangible assets

$

57,288  $

13,553 

Year Ended December 31,

2022

2021

% Increase /
(Decrease)
100% +

Amortization of acquired intangible assets increased substantially in 2022 versus 2021 due to 2022 being the first full year after the completion of the
Flexion Acquisition. We acquired a developed technology intangible asset for ZILRETTA for OA knee pain, which is being amortized over a useful life of
approximately ten years. For more information, see Note 5, Flexion Acquisition, to our consolidated financial statements included herein.

Acquisition-Related Charges (Gains), Impairment and Other

The following table provides a summary of the costs related to the Flexion Acquisition, MyoScience Acquisition, commercial agreements, termination

costs and other activities during the years indicated, including percent changes (dollar amounts in thousands):

Acquisition-related (gains) charges
Impairment of acquired in-process research & development
Other

Total acquisition-related charges (gains), impairment and other

Year Ended December 31,

2022

2021

$

$

(18,231) $
26,134 
3,000 
10,903  $

39,911 
— 
3,000 
42,911 

% Increase /
(Decrease)
N/A
N/A
—%

(75)%

In 2022, we recognized acquisition-related gains of $18.2 million. These gains were primarily driven by reductions in acquisition contingent consideration

liabilities due to adjustments to forecasts for the applicable period during which the Flexion contingent consideration may be achieved under the Flexion
Merger Agreement and due to the reduced probability of meeting the MyoScience contingent consideration milestones by December 31, 2023—the expiration
date for achieving those milestones. These gains were partially offset by severance and other employee related costs, legal and other professional fees, third-
party services and other one-time charges associated with the Flexion Acquisition. For more information, see Note 12, Financial Instruments and Note 18,
Acquisition-related Charges (Gains), Impairment and Other, to our consolidated financial statements included herein.

In 2021, we recognized acquisition-related charges of $39.9 million. These charges were primarily driven by severance and other employee related costs,

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

In 2022, we recognized an impairment of $26.1 million for an acquired in-process research and development intangible asset related to ZILRETTA for the

treatment of an OA pain of the shoulder based on the amount its previous carrying value exceeded its fair value. See Note 9, Goodwill and Intangible Assets,
for more information.

In 2022, we recognized expense of $3.0 million related to the termination of a license agreement. See Note 20, Commitments and Contingencies, to our

consolidated financial statements included herein for more information. In 2021, we agreed to a mutual termination of our development and commercialization
agreement with Nuance Biotech Co. Ltd. to advance the development and commercialization of EXPAREL in China due to the lack of a viable regulatory
pathway that adequately safeguards our intellectual property against the risk of a generic product, that led to dissolution costs of $3.0 million.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 75

Table of Contents

Other Expense, Net

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

thousands):

Interest expense
Interest income
Other, net

Total other expense, net

Year Ended December 31,

2022

2021

$

$

(39,976) $
4,542 
(11,288)
(46,722) $

(31,750)
896 
(2,666)
(33,520)

% Increase /
(Decrease)
26%
100% +
100% +

39%

Total other expense, net increased 39% in 2022 versus 2021.

The 26% increase in interest expense was due to the $375.0 million Term Loan entered into in December 2021. This increase was partially offset by the
absence of debt discount amortization associated with our convertible notes in 2022 due to adopting Accounting Standards Update, or ASU, 2020-06 in 2022,
and the maturation of our 2.375% convertible senior notes due 2022, or 2022 Notes, on April 1, 2022. For additional information regarding the adoption of
ASU 2020-06, see Note 2, Summary of Significant Accounting Policies, to our consolidated financial statements herein. We made a $50.0 million principal
prepayment on our Term Loan in December 2022 in addition to the quarterly required principal payments of $9.4 million and plan to make an additional
prepayment in 2023. For more information, See Note 11, Debt, to our consolidated financial statements herein.

Interest income significantly increased in 2022 versus 2021 due to overall investment balances and higher interest rates.

Other, net expense for 2022 included a $10.0 million impairment of an equity investment. Other, net expense for 2021 included a realized loss on the sale

of an equity investment in the amount of $2.6 million.

Income Tax (Benefit) Expense

The following table provides information regarding our income tax (benefit) expense during the years indicated, including percent changes (dollar

amounts in thousands):

Income tax (benefit) expense
Effective tax rate

Year Ended December 31,

2022

$

(2,607) $

(20)%

2021

26%

14,424 

% Increase /
(Decrease)
N/A

We recorded an income tax benefit of $2.6 million for the year ended December 31, 2022 and income tax expense of $14.4 million for the year ended

December 31, 2021. The effective tax rate of (20)% for the year ended December 31, 2022 differed from the U.S. statutory tax rate of 21% due to non-taxable
contingent consideration fair value gains, tax deductible interest for a Skyepharma milestone payment and tax credits, partially offset by valuation allowances
recorded against capital loss carryforwards and non-deductible executive compensation. The effective tax rate of 26% for the year ended December 31, 2021
differed from the U.S. statutory tax rate of 21% due to non-deductible expenses and valuation allowances recorded against capital loss carryforwards, partially
offset by stock-based compensation deductions and tax credits.

Liquidity and Capital Resources

Since our inception in 2006, we have devoted most of our cash resources to manufacturing, research and development and selling, general and
administrative activities related to the development and commercialization of EXPAREL. In addition, we acquired ZILRETTA as part of the Flexion
Acquisition in November 2021 and iovera° as part of the MyoScience Acquisition in April 2019. We are primarily dependent on the commercial success of
EXPAREL and ZILRETTA. We have financed our operations primarily with the proceeds from the sale of convertible senior notes and other debt, common
stock, product sales and collaborative licensing and milestone revenue. As of December 31, 2022, we had an accumulated deficit of $148.8 million, cash and
cash equivalents and available-for-sale investments of $325.9 million and working capital of $350.6 million.

We expect that our cash and available-for-sale investments on hand will be adequate to cover our short-term liquidity needs, and that we would be able to

access other sources of financing should the need arise.

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

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

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 76

 
 
 
 
Table of Contents

such as the deferral of employer payroll taxes, a tax credit for retaining employees and other provisions. We benefited from the provision to defer the payment
of certain employer payroll taxes in the amount of $2.8 million for the year ended December 31, 2020 and remitted $1.4 million in each of December 2021 and
2022. We remitted an additional $0.6 million in December 2022 on behalf of the benefit Flexion received prior to our completion of the Flexion Acquisition.

Summary of Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities for the years ended December 31, 2022 and 2021 (in

thousands):

Consolidated Statements of Cash Flows Data:
Net cash provided by (used in):

Operating activities
Investing activities
Financing activities

Net (decrease) increase in cash and cash equivalents

Operating Activities

Year Ended December 31,

2022

2021

$

$

145,274  $
(225,185)
(401,528)
(481,439) $

125,717 
(20,790)
380,694 
485,621 

In 2022, net cash provided by operating activities was $145.3 million compared to $125.7 million in 2021. The increase of $19.6 million was attributable

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

Investing Activities

In 2022, net cash used in investing activities was $225.2 million, which reflected $150.1 million of available-for-sale investment purchases (net of

maturities), a $32.0 million contingent consideration milestone payment that had been achieved in the fourth quarter of 2021 associated with our 2007
acquisition of Pacira Pharmaceuticals, Inc. from Skyepharma, purchases of fixed assets of $30.1 million for fill lines for our products and equipment for an
EXPAREL capacity expansion project at our Science Center Campus in San Diego, California and purchases of equity and debt investments of $13.0 million of
investments in external complementary development stage product candidates.

In 2021, net cash used in investing activities was $20.8 million, which was primarily driven by the $420.0 million cash portion of the purchase price
consideration, net of cash received, associated with the Flexion Acquisition and $45.9 million of capital expenditures, largely for equipment for our new 200-
liter EXPAREL capacity expansion project at our Science Center Campus in San Diego, California. These uses of cash were partially offset by the net sale of
available-for-sale investments of $457.2 million to fund the cash portion of the purchase price consideration associated with the Flexion Acquisition.

Financing Activities

In 2022, net cash used by financing activities was $401.5 million, which consisted of a $192.6 million principal repayment of the Flexion 2024 Notes as
part of a repurchase offer to the holders of the Flexion 2024 Notes that was triggered by the Flexion Acquisition, $157.0 million to settle the 2022 Notes that
matured on April 1, 2022 and $78.1 million of payments of Term Loan principal that included a principal prepayment of $50.0 million, partially offset by $24.4
million of proceeds from the exercise of stock options and $3.0 million from the issuance of common stock through our ESPP.

In 2021, net cash provided by financing activities was $380.7 million, which consisted of net proceeds from the Term Loan of $359.2 million, the exercise

of stock options of $23.8 million and $2.8 million from the issuance of shares through our ESPP. We also made contingent consideration payments to
MyoScience securityholders, of which $5.2 million was classified as a financing activity based on the recognition at the time of the MyoScience Acquisition.

Equity Financings

From our inception in December 2006 through December 31, 2022, we have raised $344.5 million of net proceeds from the sale of common stock and

other equity securities via public offerings.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 77

 
 
 
Table of Contents

Debt

2026 Term Loan B Facility

In December 2021, we entered into the $375.0 million Term Loan which is secured by substantially all of the Company’s and any subsidiary guarantor’s

assets and is scheduled to mature on December 7, 2026, subject to certain exceptions set forth in the Credit Agreement. The Company may elect to borrow
either alternate base rate borrowings or term benchmark borrowings. Each term loan borrowing which is an alternate base rate borrowing bears interest at a
variable rate per annum equal to the Alternate Base Rate (as defined in the Credit Agreement) subject to a 1.75% floor, plus 6.00%. Each term loan borrowing
which is a term benchmark borrowing bears interest at a variable rate per annum equal to (i) the Adjusted Term SOFR Rate (as defined in the Credit
Agreement) subject to a 0.75% floor plus (ii) 7.00%.

The Credit Agreement requires us to, among other things, maintain (i) a first lien net leverage ratio, determined as of the last day of any fiscal quarter, of

no greater than 1.75 to 1.00 and (ii) liquidity, at any time, of at least $150.0 million. The Credit Agreement also contains customary affirmative and negative
covenants, financial covenants, representations and warranties, events of default and other provisions. As of December 31, 2022, the Company was in
compliance with all financial covenants under the Credit Agreement.

At December 31, 2022, we had $296.9 million in outstanding borrowings under the Term Loan. We made a $50.0 million principal prepayment on our

Term Loan in December 2022 in addition to the quarterly required principal payments of $9.4 million and plan to make an additional prepayment in 2023. See
Note 11, Debt, to our consolidated financial statements included herein for further discussion of the Term Loan.

2025 Convertible Senior Notes

In July 2020, we completed a private placement of $402.5 million in aggregate principal amount of our 2025 Notes, and entered into an indenture with

respect to the 2025 Notes. The 2025 Notes accrue interest at a fixed rate of 0.750% per annum, payable semiannually in arrears on February 1 and August 1 of
each year. The 2025 Notes mature on August 1, 2025. At December 31, 2022, the outstanding principal on the 2025 Notes was $402.5 million. See Note 11,
Debt, to our consolidated financial statements included herein for further discussion.

2024 Convertible Senior Notes

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

2024 Notes have a maturity date of May 1, 2024, are unsecured, and accrue interest at a rate of 3.375% per annum, payable semi-annually on May 1 and
November 1 of each year. In January 2022, we repurchased $192.6 million aggregate principal amount of the Flexion 2024 Notes. At December 31, 2022, the
outstanding principal on the Flexion 2024 Notes was $8.6 million. See Note 11, Debt, to our consolidated financial statements included herein for further
discussion.

Future Capital Requirements

We believe that our existing cash and cash equivalents, available-for-sale investments and cash received from product sales will be sufficient to enable us

to fund our operating expenses, capital expenditure requirements and payment of the interest and principal on our Term Loan and our Notes, and any
conversions of our Notes through the next 12 months. Our future use of operating cash and capital requirements will depend on many forward-looking factors,
including, but not limited to, the following:

•

•

•

•

the cost and timing of the potential Flexion milestone payments in connection with the Flexion Acquisition, which could be up to an aggregate of
$372.3 million if certain regulatory and commercial milestones are met. The aggregate amount was previously $425.5 million prior to our September
2022 decision to formally discontinue further development of PCRX-301. See Note 5, Flexion Acquisition, and Note 12, Financial Instruments, to
our consolidated financial statements included herein for more information;

the cost and timing of potential remaining milestone payments to MyoScience security holders, which could be up to an aggregate of $43.0 million if
certain regulatory and commercial milestones are met. See Note 12, Financial Instruments, to our consolidated financial statements included herein
for more information;

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

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

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 78

Table of Contents

•

•

•

•

•

•

•

•

•

•

the timing and impact of increases to the variable interest rate on our Term Loan borrowings in accordance with the terms of the Credit Agreement;

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

the cost and timing of expanding and maintaining our manufacturing facilities, including the current EXPAREL capacity expansion project at our
Science Center Campus in San Diego, California and a ZILRETTA capital project at the Thermo Fisher site in Swindon, England;

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

the costs related to legal and regulatory issues;

the impact of inflation on our product costs, supply chain, operating expenses and business strategy;

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

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

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

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

We may require additional debt or equity financing to meet our future operating and capital requirements. We have no committed external sources of
funds, and additional equity or debt financing may not be available on acceptable terms, if at all. In particular, capital market disruptions or negative economic
conditions, especially in light of the COVID-19 pandemic, may hinder our access to capital.

Contractual Obligations

We had two convertible senior notes outstanding as of December 31, 2022, for which $8.6 million in aggregate principal amount is due on the 2024 Notes
in May 2024 and $402.5 million in aggregate principal amount is due on our 2025 Notes in August 2025. The remaining interest payments on our Notes is $9.4
million, of which an estimated $3.3 million is due in 2023. We also have a Term Loan with $296.9 million in outstanding principal with contractually obligated
principal payments of $37.5 million in each of 2023 and 2024, $42.2 million in 2025 and $179.7 million in 2026. The remaining interest payments on the Term
Loan are approximately $115.4 million based on the current interest rate.

In the normal course of business, we enter into various lease agreements for manufacturing, research and development and corporate activities, which are
typically classified as operating leases under the provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 842, Leases. As
of December 31, 2022, we had net minimum commitments of $93.8 million, of which $14.0 million is due in 2023. For more information, refer to Note 8,
Leases, to our consolidated financial statements included herein.

In addition, we have approximately $73.3 million of minimum, non-cancelable contractual commitments for contract manufacturing services as

of December 31, 2022, of which $18.3 million is due within one year, and the remaining $55.0 million is due in one to three years. We have approximately $5.2
million of minimum, non-cancelable contractual commitments for the purchase of certain raw materials as of December 31, 2022, of which $2.7 million is due
within one year, and the remaining $2.5 million is due in one to two years. Subsequent to December 31, 2022, we entered into an additional $2.8 million of
minimum, non-cancelable contractual commitments for marketing sponsorships, of which $0.9 million is due within one year, and the remaining $1.9 million is
due in one to two years.

As part of the Flexion Acquisition, there are up to $372.3 million in potential payments if all regulatory and commercial milestones are met. The
aggregate amount was previously $425.5 million prior to our September 2022 decision to formally discontinue further development of PCRX-301. For more
information, see Note 5, Flexion Acquisition, to our consolidated financial statements included herein. As part of the MyoScience Acquisition, upon the
achievement of certain regulatory and commercial milestones, there are up to $43.0 million in potential milestone payments available as of December 31, 2022.
The MyoScience milestone achievement period ends on December 31, 2023.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 79

Table of Contents

Critical Accounting Estimates

We have based our Management’s Discussion and Analysis of our Financial Condition and Results of Operations on our financial statements that have

been prepared in accordance with GAAP in the U.S. The preparation of these financial statements requires us to make estimates that affect the reported
amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements as well as the reported revenues and
expenses during the reporting periods. On an ongoing basis, we evaluate our estimates and judgments, including those related to revenue recognition,
contingent consideration, impairment of intangible assets, inventory costs, liabilities and accruals, clinical trial expenses, stock-based compensation and the
valuation of deferred tax assets. We base our estimates on historical experience, contract terms and on other factors we believe to be appropriate under the
circumstances. Actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies are more fully discussed in Note 2, Summary of Significant Accounting Policies, to our consolidated financial
statements included herein. The following accounting policies, which may include significant judgments and estimates, were used in the preparation of our
consolidated financial statements.

Revenue Recognition

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

chargebacks. These reserves are based on estimates of the amounts earned or to be claimed on the related sales. These amounts are treated as variable
consideration, estimated and recognized as a reduction of the transaction price at the time of the sale, using the most likely amount method, except for returns,
which is based on the expected value method. The Company includes these estimated amounts in the transaction price to the extent it is probable that a
significant reversal of cumulative revenue recognized for such transaction will not occur, or when the uncertainty associated with the variable consideration is
resolved. The calculation of some of these items requires management to make estimates based on sales data, historical return data, contracts, statutory
requirements and other related information that may become known in the future. The adequacy of these provisions is reviewed on a quarterly basis. If our
assessments, experiences or judgments are not accurate estimates of future results, our results of operations could be affected. The sensitivity of our estimates
varies by program. Estimates associated with chargebacks and government programs have the greatest risk of being subject to adjustment because of the time
delay between recording the accrual and the final settlement. Historically, adjustments to these estimates to reflect actual results or updated expectations have
not been material.

The summary of activity with respect to our sales related allowances and accruals for the years ended December 31, 2022, 2021 and 2020 appears in Note

4, Revenue, to our consolidated financial statements included herein.

Contingent Consideration

Subsequent to an acquisition, we measure contingent consideration arrangements at fair value for each period with changes in fair value recognized in the
consolidated statements of operations as acquisition-related charges (gains), impairment and other. 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 impact of the passage of time towards the potential achievement of the milestones.

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

Assumption
Discount rates
Probability of payment for achievement of regulatory milestones
Projected year of achieving or expiration of regulatory milestones

Flexion Ranges Utilized as of 
December 31, 2022
14.90% to 15.10%
0% to 12.50%
2030

The maximum remaining potential payments related to contingent consideration from the Flexion Acquisition is $372.3 million as of December 31, 2022.

Changes to assumptions may result in a material impact to the calculated amounts. Additionally, the forecasted revenue annual growth rates are key
assumptions in the contingent consideration valuations associated with our commercial milestones. The impact of a hypothetical 10 percent increase in the
forecasted annual growth rates would have increased the value of our contingent consideration liability associated with the Flexion Acquisition as of
December 31, 2022 by $5.8 million. The impact of a hypothetical 100 basis point increase in the discount rate would have reduced the value of our contingent
consideration liability associated with the Flexion Acquisition as of December 31, 2022 by $1.4 million.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 80

Table of Contents

Recent Accounting Pronouncements

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

pronouncements.

Item 7A.    Quantitative and Qualitative Disclosures about Market Risk

The primary objective of our cash equivalents and investment activities is to preserve principal while at the same time maximizing the income that we

receive from our investments without significantly increasing risk. We invest in corporate bonds, commercial paper, asset-backed securities and U.S. Treasury
and other government agency notes, which are reported at fair value. These securities are subject to interest rate risk and credit risk. This means that a change in
prevailing interest rates may cause the principal amount of the investment to fluctuate. For example, if we hold a security that was issued with a fixed interest
rate at the then-prevailing rate and the interest rate later rises, we expect that the fair value of our investment will decline. A hypothetical 100 basis point
increase in interest rates would have reduced the fair value of our available-for-sale securities at December 31, 2022 by approximately $1.3 million.

The fair value of our 2025 Notes is impacted by both the fair value of our common stock and interest rate fluctuations. As of December 31, 2022, the

estimated fair value of the 2025 Notes was $908 per $1,000 principal amount. See Note 11, Debt, to our consolidated financial statements included herein for
further discussion of our 2025 Notes, which bears interest at a fixed rate. At December 31, 2022, all $402.5 million of principal remains outstanding on the
2025 Notes and $8.6 million of principal remains outstanding on the 2024 Notes. As a result of the Flexion Acquisition and as discussed in more detail in Note
11, Debt, to our consolidated financial statements included herein, any future conversion rights for the 2024 Notes are subject to the occurrence of any future
events giving rise to such conversion rights under the indenture governing the 2024 Notes.

Upon issuance, the Term Loan provided for a single-advance term loan in the principal amount of $375.0 million and is scheduled to mature on December

7, 2026. Each term loan borrowing which is an alternate base rate borrowing bears interest at a variable rate per annum equal to the Alternate Base Rate (as
defined in the Credit Agreement) subject to a 1.75% floor, plus 6.00%. Each term loan borrowing which is a term benchmark borrowing bears interest at a
variable rate per annum equal to (i) the Adjusted Term SOFR rate (as defined in the Credit Agreement) subject to a 0.75% floor plus (ii) 7.00%. At
December 31, 2022, we had $296.9 million in outstanding borrowings under the Term Loan. A hypothetical 100 basis point increase in interest rates would
have increased interest expense during the year ended December 31, 2022 by approximately $3.6 million.

We have agreements with certain vendors and partners that operate in foreign jurisdictions. The more significant transactions are primarily denominated

in the U.S. Dollar, subject to an annual adjustment based on changes in currency exchange rates.

Additionally, our accounts receivable are primarily concentrated with four large wholesalers of pharmaceutical products. In the event of non-performance

or non-payment, there may be a material adverse impact on our financial condition, results of operations or net cash flow.

Item 8.    Financial Statements and Supplementary Data

Our consolidated financial statements required by this item, together with the report of our independent registered public accounting firm, begin on

page F-1 of this Annual Report.

Item 9.    Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

None.

Item 9A.    Controls and Procedures

Evaluation of Disclosure Controls and Procedures

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.

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.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 81

Table of Contents

Management’s Report on Internal Control over Financial Reporting

Our 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 GAAP. Our management is responsible for establishing and maintaining adequate
internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f) and 15d-15(f). Under the supervision and with the
participation of our management, including our Chief Executive Officer and Chairman and Chief Financial Officer, management conducted an evaluation of the
effectiveness of our internal control over financial reporting as of December 31, 2022, based on the criteria established in Internal Control—Integrated
Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). 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, 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

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.

Item 9B.    Other Information

None.

Item 9C.    Disclosure Regarding Foreign Jurisdictions that Prevent Inspections

None.

PART III

Item 10.    Directors, Executive Officers and Corporate Governance

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.

Item 11.    Executive Compensation

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.

Item 12.    Security Ownership of Certain Beneficial Owners and Management and Related Stockholders Matters

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

this report.

Item 13.    Certain Relationships and Related Transactions, and Director Independence

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.

Item 14.    Principal Accountant Fees and Services

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.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 82

Table of Contents

Item 15.    Exhibits, Financial Statement Schedules

(a)

Documents filed as part of this Annual Report on Form 10-K:

PART IV

(1) Financial Statements

Consolidated Balance Sheets

Consolidated Statements of Operations

Consolidated Statements of Comprehensive Income

Consolidated Statements of Stockholders’ Equity

Consolidated Statements of Cash Flows

Notes to Consolidated Financial Statements

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.

(3) Exhibits

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

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 83

Table of Contents

Exhibit
Number

EXHIBIT INDEX

Description

Incorporation By Reference From
Date
Filed

Exhibit

Form

2.1

2.2

3.1

3.2

3.3
4.1

4.2

4.3

4.4

4.6
10.1

10.2

10.3

10.4

10.3

10.4

10.5
10.6

10.7

10.8
10.9

10.10

10.11

10.12

10.13

Agreement and Plan of Merger, dated March 4, 2019, by and among Pacira Pharmaceuticals, Inc.,
PS Merger, Inc., MyoScience, Inc., and Fortis Advisors LLC, as the securityholders’ representative.
# †
Agreement and Plan of Merger, dated as of October 11, 2021, by and among Flexion Therapeutics,
Inc., Pacira BioSciences, Inc. and Oyster Acquisition Company Inc.
Amended and Restated Certificate of Incorporation.
Certificate of Amendment to the Amended and Restated Certificate of Incorporation, dated April 9,
2019.
Second Amended and Restated Bylaws.
Specimen Certificate Evidencing Shares of Common Stock.
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).
Indenture (including form of 3.375% Convertible Senior Notes due 2024), dated as of May 2, 2017,
by and between Flexion Therapeutics, Inc. and Computershare Corporate Trust, National
Association, as trustee (formerly Wells Fargo Bank, National Association).
First Supplemental Indenture, dated as of November 19, 2021, by and between Flexion
Therapeutics, Inc. and Computershare Corporate Trust, National Association, as trustee (formerly
Wells Fargo Bank, National Association).
Description of Securities.
Amended and Restated 2011 Stock Incentive Plan.***
Form of Nonstatutory Stock Option Agreement under the Amended and Restated 2011 Stock
Incentive Plan for grants made prior to 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.* ***
Form of Nonstatutory Stock Option Agreement (Non-Employee Directors) under the Amended and
Restated 2011 Stock Incentive Plan for grants made on or after February 1, 2022.* ***
Form of Restricted Stock Unit Award Agreement (Employees) under the Amended and Restated
2011 Stock Incentive Plan.***
Form of Restricted Stock Unit Award Agreement (Non-Employee Directors) under the Amended
and Restated 2011 Stock Incentive Plan.***
2014 Inducement Plan.***
Amended and Restated 2014 Employee Stock Purchase Plan.***
Assignment Agreement, dated February 9, 1994, amended April 15, 2004, between the Registrant
and Research Development Foundation.
Stock Purchase Agreement, dated January 8, 2007, between SkyePharma, Inc. and the Registrant.
Employment Agreement between the Registrant and David Stack.***
Amendment No. 1 to Executive Employment Agreement, dated March 13, 2013, between the
Registrant and David Stack.***
Amendment No. 2 to Executive Employment Agreement, dated June 30, 2015, between the
Registrant and David Stack.***
Employment Agreement, dated November 29, 2012, between the Registrant and Kristen
Williams.***
Amendment No. 1 to Employment Agreement, dated March 13, 2013, between the Registrant and
Kristen Williams.***

8-K

8-K

8-K

8-K

8-K
10-Q

8-K

10-K

10-K

10-K
8-K

8-K

10-K

10-K

10-Q

10-Q

10-Q
8-K

S-1/A

S-1/A
S-1/A

8-K

10-Q

10-Q

10-Q

2.1

2.1

3.1

3.1

3.2
4.1

4.1

4.4

4.5

4.3
10.1

10.3

10.3

10.4

10.6

10.7

10.1
10.1

10.4

10.5
10.21

99.3

10.2

10.2

10.3

3/5/2019

10/12/2021

2/11/2011

4/9/2019

4/9/2019
5/2/2019

7/10/2020

2/28/2022

2/28/2022

2/21/2020
6/11/2021

6/4/2014

2/28/2022

2/28/2022

7/30/2015

7/30/2015

5/1/2014
6/10/2022

12/3/2010

12/3/2010
12/3/2010

3/18/2013

7/30/2015

4/30/2015

4/30/2015

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 84

Table of Contents

Exhibit
Number

Description

Incorporation By Reference From
Date
Filed

Exhibit

Form

10.14

10.15

10.16

10.17

10.18

10.19

10.20

10.21

10.22

10.23

10.24
10.25
10.26

10.27

10.28

10.29

10.30

10.31

10.32

10.33

10.34

10.35

10.36

10.37

10.38

Amendment No. 2 to Employment Agreement, dated June 30, 2015, between the Registrant and
Kristen Williams.***
Executive Employment Agreement, dated May 2, 2016, between the Registrant and Charles A.
Reinhart, III.***
Executive Employment Agreement, dated June 19, 2019, between the Registrant and Max
Reinhardt.***
Executive Employment Agreement, dated April 24, 2017, between the Registrant and Roy
Winston.***
Form of Indemnification Agreement between the Registrant and its directors and officers.***
Commercial Outsourcing Services Agreement entered into as of August 25, 2011 by the Registrant
and Integrated Commercialization Solutions, Inc.†
First Amendment to Commercial Outsourcing Services Agreement, dated August 1, 2013, between
the Registrant and Integrated Commercialization Solutions, Inc.†
Second Amendment to Commercial Outsourcing Services Agreement, dated August 25, 2014,
between the Registrant and Integrated Commercialization Solutions, Inc.†
Third Amendment to Commercial Outsourcing Services Agreement, dated April 29, 2015, between
the Registrant and Integrated Commercialization Solutions, Inc.†
Fourth through Eleventh Amendments to Commercial Outsourcing Services Agreement, between
the Registrant and Integrated Commercialization Solutions, Inc.††
Pacira BioSciences, Inc. Deferred Compensation Plan.***
Amendment No. 1 to Pacira BioSciences, Inc. Deferred Compensation Plan.* ***
Pacira BioSciences, Inc. Long-Term Incentive Plan.***
Strategic Co-Production Agreement dated April 4, 2014, by and between the Registrant and
Patheon UK Limited.†
Manufacturing and Supply Agreement dated April 4, 2014, by and between the Registrant and
Patheon UK Limited.†
Technical Transfer and Service Agreement dated April 4, 2014, by and between the Registrant and
Patheon UK Limited.†
Amended and Restated Consulting Agreement, dated April 3, 2012, between the Registrant and
Gary Pace.***
Second Amended and Restated Consulting Agreement, dated August 17, 2012, between the
Registrant and Gary Pace.***
Third Amendment to Consulting Agreement, dated September 11, 2013, between the Registrant and
Gary Pace.***
Fourth Amendment to Consulting Agreement, dated November 25, 2015, between the Registrant
and Gary Pace.***
Executive Employment Agreement, dated May 29, 2017, between the Registrant and Dennis
McLoughlin.***
Contingent Value Right Agreement, dated as of November 19, 2021, by and between Pacira
BioSciences, Inc. and American Stock Transfer & Trust Company, LLC.
Credit Agreement, dated as of December 7, 2021, by and among Pacira BioSciences, Inc., the
lenders from time to time party thereto and JPMorgan Chase Bank, N.A., as administrative agent.##
Manufacturing and Supply Agreement dated July 31, 2015, between Flexion Therapeutics, Inc. and
Patheon UK Limited, as amended to date.††
Technical Transfer and Service Agreement dated July 31, 2015, between Flexion Therapeutics, Inc.
and Patheon UK Limited, as amended to date.††

10-Q

10-Q

10-Q

10-Q

S-1/A

10-Q

10-Q

10-Q

10-Q

10-Q

8-K

8-K

10-Q

10-Q

10-Q

10-Q

10-Q

10-Q

10-K

10-Q

8-K

8-K

10-K

10-K

10.5

10.1

10.1

10.2

10.32

10.1

10.1

10.1

10.1

10.3

10.1

10.1

10.1

10.2

10.3

10.1

10.1

10.3

7/30/2015

8/4/2016

5/7/2020

5/7/2020

1/13/2011

8/25/2011

10/31/2013

10/30/2014

7/30/2015

5/7/2020

6/11/2020

12/7/2020

7/31/2014

7/31/2014

7/31/2014

5/9/2012

11/1/2012

10/31/2013

10.57

2/25/2016

10.1

10.1

10.1

10.36

10.37

5/2/2019

11/19/2021

12/9/2021

2/28/22

2/28/22

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 85

Incorporation By Reference From
Date
Filed

Exhibit

Form

10-K

10-Q

10.38

10.1

2/28/22

5/4/2022

Table of Contents

Exhibit
Number

10.39

10.40

21.1
23.1
31.1
31.2

32.1

Description

Side Letter to the Manufacturing and Supply Agreement between Flexion Therapeutics, Inc. and
Patheon UK Limited, dated as of April 8, 2020.††
Executive Employment Agreement, dated May 4, 2020, between the Registrant and Jonathan
Slonin.***
Subsidiaries of the Registrant.*
Consent of KPMG LLP.*
Certification of Chief Executive Officer and Chairman pursuant to Exchange Act Rule 13a-14(a).*
Certification of Chief Financial Officer pursuant to Exchange Act Rule 13a-14(a).*
Certification of Chief Executive Officer and Chairman and Chief Financial Officer pursuant to 18
U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.**

101.INS*
101.SCH*
101.CAL*
101.LAB*
101.PRE*
101.DEF*
104*

Inline XBRL Instance Document.*
Inline XBRL Taxonomy Schema Document.*
Inline XBRL Taxonomy Calculation Linkbase Document.*
Inline XBRL Taxonomy Label Linkbase Document.*
Inline XBRL Taxonomy Presentation Linkbase Document.*
Inline XBRL Taxonomy Extension Definition Linkbase Document.*
Cover Page Interactive Data File (Formatted as Inline XBRL and contained in Exhibit 101).

*     Filed herewith.

**    Furnished herewith.

***    Denotes management contract or compensatory plan or arrangement.

†    Confidential treatment has been requested or granted as to certain portions, which portions were omitted and filed separately with the Securities and

Exchange Commission pursuant to a Confidential Treatment Request.

††    Certain portions of the exhibit have been omitted pursuant to Rule 601(b)(10) of Regulation S-K. The omitted information is (i) not material and (ii) would

likely cause competitive harm to the Company if publicly disclosed.

#    Certain schedules have been omitted pursuant to Item 601(b)(2) of Regulation S-K under the Securities Exchange Act of 1934, as amended. The Company

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

## Schedules and exhibits have been omitted pursuant to Item 601(a)(5) of Regulation S-K. The Company hereby undertakes to supplementally furnish copies

of any omitted schedules and exhibits to the Securities and Exchange Commission upon request.

Item 16.    Form 10-K Summary

None.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 86

Table of Contents

SIGNATURES

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.

Date: February 28, 2023

By:

PACIRA BIOSCIENCES, INC.

/s/ DAVID STACK
David Stack
Chief Executive Officer and Chairman

Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following

persons on behalf of the registrant and in the capacities and on the dates indicated.

Signature

Title

Date

/s/ DAVID STACK

David Stack

/s/ CHARLES A. REINHART, III

Charles A. Reinhart, III

/s/ LAUREN RIKER

Lauren Riker

/s/ LAURA BREGE

Laura Brege

/s/ CHRISTOPHER J. CHRISTIE

Christopher J. Christie

/s/ MARK FROIMSON

Mark Froimson

/s/ YVONNE GREENSTREET

Yvonne Greenstreet

/s/ MARK KRONENFELD

Mark Kronenfeld

/s/ GARY PACE

Gary Pace

/s/ ANDREAS WICKI

Andreas Wicki

/s/ PAUL HASTINGS

Paul Hastings

Director, Chief Executive Officer and Chairman
(Principal Executive Officer)

February 28, 2023

Chief Financial Officer
(Principal Financial Officer)

Senior Vice President, Finance
(Principal Accounting Officer)

Director

Director

Director

Director

Director

Director

Director

February 28, 2023

February 28, 2023

February 28, 2023

February 28, 2023

February 28, 2023

February 28, 2023

February 28, 2023

February 28, 2023

February 28, 2023

Lead Director

February 28, 2023

Pacira BioSciences, Inc. | 2022 Form 10-K | Page 87

 
 
 
 
Table of Contents

PACIRA BIOSCIENCES, INC.
ANNUAL REPORT ON FORM 10-K
FOR THE YEAR ENDED DECEMBER 31, 2022

INDEX TO THE CONSOLIDATED FINANCIAL STATEMENTS

Report of Independent Registered Public Accounting Firm

Auditor Name:
Auditor Location:
Auditor Firm ID:

KPMG LLP
Short Hills, NJ
185

Consolidated Balance Sheets as of December 31, 2022 and 2021
Consolidated Statements of Operations for the years ended December 31, 2022, 2021 and 2020
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
Consolidated Statements of Cash Flows for the years ended December 31, 2022, 2021 and 2020
Notes to Consolidated Financial Statements

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-1

Page #
F-2

F-4
F-5
F-6
F-7
F-8
F-10

Table of Contents

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Stockholders and Board of Directors
Pacira BioSciences, Inc.:

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, 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. 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 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. 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 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

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.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-2

Table of Contents

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.

Critical Audit Matters

The critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements that were
communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are material to the consolidated
financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter
in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matters below, providing
separate opinions on the critical audit matters or on the accounts or disclosures to which they relate.

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

The following are the primary procedures we performed to address this critical audit matter. We evaluated the design and tested the operating
effectiveness of certain internal controls related to the Company’s fair value measurement process for the contingent consideration liability related to
achieving commercial and regulatory milestones. This

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-3

Table of Contents

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.

/s/ KPMG LLP

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

Short Hills, New Jersey
February 28, 2023

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-4

Table of Contents

PACIRA BIOSCIENCES, INC.
CONSOLIDATED BALANCE SHEETS

(In thousands, except share and per share amounts)

ASSETS
Current assets:

Cash and cash equivalents
Short-term available-for-sale investments
Accounts receivable, net
Inventories, net
Prepaid expenses and other current assets

Total current assets

Noncurrent available-for-sale investments
Fixed assets, net
Right-of-use assets, net
Goodwill
Intangible assets, net
Deferred tax assets
Investments and other assets

Total assets

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:

Accounts payable
Accrued expenses
Lease liabilities
Convertible senior notes, net
Current portion of long-term debt, net
Income taxes payable

Total current liabilities

Convertible senior notes, net
Long-term debt, net
Lease liabilities
Contingent consideration
Other liabilities

Total liabilities

Commitments and contingencies (Note 20)
Stockholders’ equity:

Preferred stock, par value $0.001; 5,000,000 shares authorized; none issued and outstanding at December 31, 2022
and 2021
Common stock, par value $0.001; 250,000,000 shares authorized; 45,927,790 and 44,734,308 shares issued and
outstanding at December 31, 2022 and 2021, respectively
Additional paid-in capital
Accumulated deficit
Accumulated other comprehensive (loss) income

Total stockholders’ equity

Total liabilities and stockholders’ equity

See accompanying notes to consolidated financial statements.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-5

December 31,

2022

2021

104,139  $
184,512 
98,397 
96,063 
15,223 
498,334 
37,209 
183,512 
70,877 
163,243 
540,546 
160,309 
27,170 
1,681,200  $

15,220  $
89,785 
9,121 
— 
33,648 
— 
147,774 
404,767 
251,056 
64,802 
28,122 
9,669 
906,190 

585,578 
70,831 
96,318 
98,550 
14,771 
866,048 
— 
188,401 
76,410 
145,175 
623,968 
153,364 
21,987 
2,075,353 

10,543 
127,555 
7,891 
350,466 
24,234 
429 
521,118 
339,267 
335,263 
71,727 
57,598 
19,972 
1,344,945 

— 

— 

46 
924,095 
(148,751)
(380)
775,010 
1,681,200  $

45 
942,091 
(211,895)
167 
730,408 
2,075,353 

$

$

$

$

 
 
 
 
 
 
 
 
 
Table of Contents

PACIRA BIOSCIENCES, INC.

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

2022

Year Ended December 31,
2021

2020

Revenues:

Net product sales
Royalty revenue
Collaborative licensing and milestone revenue

Total revenues
Operating expenses:
Cost of goods sold
Research and development
Selling, general and administrative
Amortization of acquired intangible assets
Acquisition-related charges (gains), impairment and other

Total operating expenses

Income from operations
Other (expense) income:

Interest income
Interest expense
Loss on early extinguishment of debt
Other, net

Total other expense, net
Income before income taxes

Income tax benefit (expense)

Net income

Net income per share:

Basic net income per common share
Diluted net income per common share

Weighted average common shares outstanding:

Basic
Diluted

$

$

$
$

664,150  $
2,673 
— 
666,823 

538,966  $
2,442 
125 
541,533 

199,295 
84,797 
254,516 
57,288 
10,903 
606,799 
60,024 

4,542 
(39,976)
— 
(11,288)
(46,722)
13,302 
2,607 
15,909  $

0.35  $
0.34  $

45,521 
46,538 

140,255 
55,545 
199,345 
13,553 
42,911 
451,609 
89,924 

896 
(31,750)
— 
(2,666)
(33,520)
56,404 
(14,424)
41,980  $

0.95  $
0.92  $

44,262 
45,630 

426,614 
3,033 
— 
429,647 

117,328 
59,421 
193,516 
7,866 
5,166 
383,297 
46,350 

4,629 
(25,671)
(8,071)
2,852 
(26,261)
20,089 
125,434 
145,523 

3.41 
3.33 

42,671 
43,682 

See accompanying notes to consolidated financial statements.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents

PACIRA BIOSCIENCES, INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

Net income
Other comprehensive (loss) income:

Net unrealized loss on investments, net of tax
Foreign currency translation adjustments
Total other comprehensive loss

Comprehensive income

2022

Year Ended December 31,
2021

2020

15,909  $

41,980  $

145,523 

(662)
115 
(547)
15,362  $

(180)
29 
(151)
41,829  $

(3)
(1)
(4)
145,519 

$

$

See accompanying notes to consolidated financial statements

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-7

 
 
 
 
 
Table of Contents

PACIRA BIOSCIENCES, INC.
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2022, 2021 AND 2020

Balance at December 31, 2019

Exercise of stock options
Vested restricted stock units
Common stock issued under employee stock purchase
plan
Stock-based compensation
Retirement of equity component of 2022 convertible
senior notes (Note 11)
Equity component of 2025 convertible senior notes
issued, net of deferred taxes of $20,450 (Note 11)
Other comprehensive loss (Note 13)
Net income

Balance at December 31, 2020

Exercise of stock options
Vested restricted stock units
Common stock issued under employee stock purchase
plan
Stock-based compensation
Other comprehensive loss (Note 13)
Net income

Balance at December 31, 2021

Reclassification of the equity component of convertible
senior notes to liabilities upon adoption of Accounting
Standards Update 2020-06 (Note 3)
Exercise of stock options
Vested restricted stock units
Common stock issued under employee stock purchase
plan
Stock-based compensation
Issuance of common stock upon conversion of 2022
convertible senior notes (Note 11)
Other comprehensive loss (Note 13)
Net income

Balance at December 31, 2022

(In thousands)

Common Stock

Shares

Amount

Additional
Paid-In
Capital

41,908  $
1,428 
239 

42  $
2 
— 

753,978  $
45,227 
— 

62 
— 

— 

— 
— 
— 
43,637 
732 
310 

55 
— 
— 
— 
44,734 

— 
690 
331 

71 
— 

— 
— 

— 

— 
— 
— 
44 
1 
— 

— 
— 
— 
— 
45 

— 
1 
— 

— 
— 

2,546 
39,920 

(33,089)

64,619 
— 
— 
873,201 
23,833 
— 

2,811 
42,246 
— 
— 
942,091 

(96,468)
24,386 
— 

2,954 
48,092 

Accumulated
Deficit
(399,398) $

— 
— 

— 
— 

— 

— 
— 
145,523 
(253,875)
— 
— 

— 
— 
— 
41,980 
(211,895)

47,235 
— 
— 

— 
— 

Accumulated
Other
Comprehensive
Income (Loss)

Total

322  $
— 
— 

— 
— 

— 

— 
(4)
— 
318 
— 
— 

— 
— 
(151)
— 
167 

— 
— 
— 

— 
— 

354,944 
45,229 
— 

2,546 
39,920 

(33,089)

64,619 
(4)
145,523 
619,688 
23,834 
— 

2,811 
42,246 
(151)
41,980 
730,408 

(49,233)
24,387 
— 

2,954 
48,092 

3,040 
(547)
15,909 
775,010 

102 
— 
— 
45,928  $

— 
— 
— 
46  $

3,040 
— 
— 
924,095  $

— 
— 
15,909 
(148,751) $

— 
(547)
— 
(380) $

See accompanying notes to consolidated financial statements.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-8

 
 
 
 
 
 
 
 
Table of Contents

PACIRA BIOSCIENCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)

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

Deferred taxes
Depreciation of fixed assets and amortization of intangible assets
Amortization of debt issuance costs
Amortization of debt discount
Loss (gain) on disposal of fixed assets
Loss on early extinguishment of debt
Stock-based compensation
Changes in contingent consideration
Impairment of indefinite-lived intangible asset
Impairment of investment
Loss (gain) on investment and other non-operating income, net

Changes in operating assets and liabilities:

Accounts receivable, net
Inventories, net
Prepaid expenses and other assets
Accounts payable
Accrued expenses and income taxes payable
Other liabilities
Payment of contingent consideration
Net cash provided by operating activities

Investing activities:

Acquisition of Flexion Therapeutics, Inc. (net of cash acquired)
Purchases of fixed assets
Purchases of available-for-sale investments
Sales of available-for-sale investments
Payment of contingent consideration
Sale of equity investment
Purchases of equity and debt investments
Net cash used in investing activities

Financing activities:

Proceeds from exercises of stock options
Proceeds from common stock issued under employee stock purchase plan
Proceeds from Term loan B facility maturing December 2026
Proceeds from debt component of the 2025 convertible senior notes
Proceeds from equity component of the 2025 convertible senior notes
Repayment of 2022 convertible senior notes
Retirement of equity component of the 2022 convertible senior notes
Repayment of 2024 convertible senior notes
Repayment of Term loan B facility maturing December 2026
Payment of debt issuance and financing costs
Payment of contingent consideration
Net cash (used) provided by financing activities
Net (decrease) increase in cash and cash equivalents
Cash and cash equivalents, beginning of year

Cash and cash equivalents, end of year

Year Ended December 31,
2021

2022

2020

$

15,909  $

41,980  $

145,523 

(7,945)
91,501 
4,400 
2,807 
193 
— 
48,092 
(29,476)
26,134 
10,000 
92 

(2,079)
2,486 
(2,699)
6,272 
(19,857)
(556)
— 
145,274 

— 
(30,076)
(387,685)
237,576 
(32,000)
— 
(13,000)
(225,185)

10,872 
28,548 
2,754 
23,152 
(10)
— 
42,246 
(989)
— 
— 
2,673 

(10,434)
(4,467)
1,142 
(10,262)
5,451 
(104)
(6,835)
125,717 

(420,042)
(45,866)
(611,488)
1,068,736 
(4,000)
9,057 
(17,187)
(20,790)

24,387 
2,954 
— 
— 
— 
(156,960)
— 
(192,609)
(78,125)
(1,175)
— 
(401,528)
(481,439)
585,578 
104,139  $

23,844 
2,811 
363,750 
— 
— 
— 
— 
— 
— 
(4,546)
(5,165)
380,694 
485,621 
99,957 
585,578  $

$

(126,613)
19,908 
2,156 
18,254 
22 
8,071 
39,920 
5,204 
— 
— 
(1,618)

(5,516)
(6,353)
(739)
(3,312)
(5,999)
(2,467)
(9,409)
77,032 

— 
(37,801)
(546,516)
307,870 
— 
— 
(1,160)
(277,607)

45,218 
2,546 
— 
314,708 
87,792 
(176,793)
(33,089)
— 
— 
(12,487)
(5,591)
222,304 
21,729 
78,228 
99,957 

See accompanying notes to consolidated financial statements.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Table of Contents

PACIRA BIOSCIENCES, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)

(In thousands)

Supplemental cash flow information:

Cash paid for interest
Cash paid for income taxes, net of refunds
Non-cash investing and financing activities:

Issuance of common stock from conversion of 2022 convertible senior notes
Fixed assets included in accounts payable and accrued liabilities
Net additions to contingent consideration liabilities

Year Ended December 31,
2021

2022

2020

$
$

$
$
$

33,295  $
7,398  $

3,040  $
5,888  $
—  $

6,996  $
3,221  $

—  $
6,828  $
45,241  $

7,205 
2,417 

— 
9,288 
— 

See accompanying notes to consolidated financial statements.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-10

 
 
 
 
 
 
Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

NOTE 1—DESCRIPTION OF BUSINESS

Pacira BioSciences, Inc. 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 is also
developing innovative interventions to address debilitating conditions involving the sympathetic nervous system, such as cardiac electrical storm, chronic pain
and spasticity. 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, or U.K.,in November 2021. EXPAREL utilizes the
Company’s proprietary multivesicular liposome, or pMVL, drug delivery technology that encapsulates drugs without altering their molecular structure, and
®
releases them over a desired period of time. In 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, 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. 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 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.

NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

These consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America,
or GAAP, and in accordance with the rules and regulations of the United States Securities and Exchange Commission, or SEC. The accounts of the Company’s
wholly owned subsidiaries are included in these consolidated financial statements. All intercompany balances and transactions have been eliminated in
consolidation. 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 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. | 2022 Form 10-K | Page F-11

Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

(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.

Collaborative Licensing and Milestone Revenue

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

Royalty Revenue

Royalties are estimated and recognized as revenue when sales to the Company’s commercial partners occur, unless some constraint exists, as the royalties

predominately relate to a supply agreement. Royalties are based on sales of the Company’s bupivacaine liposome injectable suspension product for veterinary
use.

Concentration of Major Customers

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 physicians. The Company also sells EXPAREL directly to ambulatory surgery centers and physicians. The Company
sells ZILRETTA primarily to specialty distributors and a specialty pharmacy, who then subsequently resell ZILRETTA to physicians, clinics and certain
medical centers or hospitals. The Company also contracts directly with healthcare providers and intermediaries such as Group Purchasing Organizations, or
GPOs. The Company sells its bupivacaine liposome injectable suspension for veterinary use to a third-party licensee in the U.S. and sells iovera° directly to end
users.

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

Largest wholesaler
Second largest wholesaler
Third largest wholesaler

   Total

2022

Year Ended December 31,
2021

2020

31 %
23 %
22 %
76 %

31 %
28 %
26 %
85 %

31 %
31 %
25 %
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. | 2022 Form 10-K | Page F-12

 
 
Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Revenue from outside the U.S. accounted for less than 1% of the Company’s total revenue for the years ended December 31, 2022 and 2021. The
Company began selling EXPAREL in the E.U. and U.K. and iovera° in Canada in the fourth quarter of 2021. The Company had no revenue from outside the
U.S. during the year ended December 31, 2020.

Research and Development Expenses

Research and development expenditures are expensed as incurred. These include both internal and external costs, of which a significant portion of
development activities are outsourced to third parties, including contract research organizations. Clinical trial costs are accrued over the service periods
specified in contracts and adjusted as necessary based on an ongoing review of the level of effort and actual costs incurred. Research and development costs are
presented net of reimbursements from commercial partners.

Income Taxes

The Company uses the asset and liability method of accounting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future

tax consequences attributable to basis differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax
bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary
differences are expected to be recovered or settled. 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, including those related to unrecognized tax benefits, as a

component of income tax expense in its consolidated statements of operations.

Stock-Based Compensation

The Company’s stock-based compensation consists of grants of stock options and restricted stock units, or RSUs, to employees, consultants and non-
employee directors, in addition to the opportunity for employees to participate in an employee stock purchase plan. 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 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

• Expected volatility

• Expected dividends

• Risk-free interest rate

The Company utilizes its historical volatility data to determine expected volatility over the expected option term. The Company uses an expected term

based on its historical data from stock option activity. The risk-free interest rate is based on the implied yield on U.S. Department of the Treasury zero-coupon
bonds for periods commensurate with the expected term of the options. The dividend yield on the Company’s common stock is estimated to be zero as the
Company has not declared or paid any dividends since inception, nor does it have any intention to do so in the foreseeable future. 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 of grants as
they occur rather than estimating forfeitures during each reporting period.

Cash and Cash Equivalents

All highly liquid investments with maturities of 90 days or less when purchased are considered cash equivalents. 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. The carrying values approximate fair value as of December 31, 2022 and 2021.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-13

Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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. (and denominated in the U.S. dollar) by foreign entities, all with maturities of greater than
three months, but less 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. The Company’s investment policy sets minimum credit quality criteria and
maximum maturity limits on its investments to provide for preservation of capital, liquidity and a reasonable rate of return. The Company classifies its
investments as available-for-sale. 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 (loss) income 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. The Company evaluates whether a credit loss exists, and in the
event a credit loss does exist, the credit loss is recognized in the consolidated statements of operations based on the amount that the fair value is less than the
amortized cost.

Inventories

Inventories consist of finished goods held for sale and distribution, raw materials and work in process. Inventories are stated at the lower of cost, which

includes amounts related to material, labor and overhead, or net realizable value, and is determined using the first-in, first-out (“FIFO”) method. The Company
periodically reviews its inventory to identify obsolete, slow-moving, or otherwise unsalable inventories, and establishes allowances for situations in which the
cost of the inventory is not expected to be recovered.

Fixed Assets

Fixed assets are recorded at cost, net of accumulated depreciation and amortization. The Company reviews its property, plant and equipment assets for

impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

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. Useful lives by asset category are as follows:
Asset Category
Computer equipment and software
Office furniture and equipment
Manufacturing and laboratory equipment

Useful Life
1 to 3 years
5 years
5 to 10 years

Asset Retirement Obligations

The Company has contractual obligations stemming from certain of its lease agreements to return leased space to its original condition upon termination

of such lease agreements. The Company records its asset retirement obligations, or ARO, along with a corresponding capital asset in an amount equal to the
estimated fair value of the ARO, based on the present value of expected future cash flows. 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 fixed asset.

Leases

The Company recognizes right-of-use, or ROU, assets and lease liabilities at the commencement of its lease agreements. The leases are evaluated at
commencement to determine whether they should be classified as operating or financing leases. Lease costs associated with operating leases are recognized on
a straight-line basis, while lease costs for financing leases are recognized over the lease term using the effective interest method. 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

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-14

Table of Contents

PACIRA BIOSCIENCES, INC.
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.

Acquisitions

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. Assets acquired and liabilities assumed in a business combination that arise from contingencies
are generally recognized at fair value. If fair value can be determined, the asset or liability is recognized; if fair value is not determinable, then no asset or
liability is recognized. Fair value is defined as the exchange price that would be received for an asset or paid to transfer a liability (an “exit price”) in the
principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date.

Acquired in-process research and development, or IPR&D, is recognized at fair value and initially characterized as an indefinite-lived intangible asset,
irrespective of whether the acquired IPR&D has an alternative future use. If the acquired net assets do not constitute a business under the acquisition method of
accounting, the transaction is accounted for as an asset acquisition and no goodwill is recognized. In an asset acquisition, the amount allocated to acquired
IPR&D with no alternative future use is recorded as an expense at the acquisition date.

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

Contingent Consideration

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 or expiration of the milestones, and are accreted to the period in which payments are expected to be
made.

Goodwill

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 exists.

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 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. | 2022 Form 10-K | Page F-15

Table of Contents

Impairments of Long-Lived Assets

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

Basic net income (loss) per common share is computed by dividing net income (loss) available (attributable) to common stockholders by the weighted

average number of shares of common stock outstanding during the period.

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, 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

The balance sheet accounts of the Company’s foreign subsidiaries with functional currencies other than the U.S. Dollar are translated using the exchange

rate at each respective balance sheet date. Revenues and expenses are translated using 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.

Segment Reporting

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—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 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. | 2022 Form 10-K | Page F-16

Table of Contents

NOTE 4—REVENUE

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 is limited to
revenue associated with net product sales of EXPAREL and ZILRETTA.

Net Product Sales

The Company sells EXPAREL through a drop-ship program under which orders are processed through wholesalers based on orders of the product placed

by end-users, namely hospitals, ambulatory surgery centers and healthcare provider offices. EXPAREL is delivered directly to the end-user without the
wholesaler ever taking physical possession of the product. The Company primarily sells ZILRETTA to specialty distributors and a specialty pharmacy, who
then subsequently resell ZILRETTA to physicians, clinics and certain medical centers or hospitals. The Company also contracts directly with healthcare
providers and intermediaries such as GPOs. Product revenue is recognized when control of the promised goods are transferred to the customers, in an amount
that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods. EXPAREL and ZILRETTA revenue is recorded
at the time the product is delivered to the customer.

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

chargebacks. These reserves are based on estimates of the amounts earned or to be claimed on the related sales. These amounts are treated as variable
consideration, estimated and recognized as a reduction of the transaction price at the time of the sale, using the most likely amount method, except for returns,
which is based on the expected value method. The Company includes these estimated amounts in the transaction price to the extent it is probable that a
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. | 2022 Form 10-K | Page F-17

Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Balance at December 31, 2019
  Provision
  Payments/Adjustments
Balance at December 31, 2020
   Provision
   Payments/Adjustments
Balance at December 31, 2021
   Provision
   Payments/Adjustments

Balance at December 31, 2022

Returns
Allowances

Prompt Payment
Discounts

Service
Fees

Volume Rebates
and Chargebacks

Government
Rebates

Total

$

$

540  $
794 
(311)
1,023 
3,095 
(757)
3,361 
1,390 
(3,060)
1,691  $

962  $

8,541 
(8,496)
1,007 
10,388 
(10,217)
1,178 
11,145 
(11,136)

1,187  $

1,486  $
6,437 
(6,755)
1,168 
10,112 
(7,644)
3,636 
16,866 
(17,309)

3,193  $

1,816  $

12,345 
(12,561)
1,600 
17,101 
(15,207)
3,494 
48,890 
(46,932)

5,452  $

—  $
— 
— 
— 
1,139 
(378)
761 
1,641 
(1,616)

786  $

4,804 
28,117 
(28,123)
4,798 
41,835 
(34,203)
12,430 
79,932 
(80,053)
12,309 

Collaborative Licensing and Milestone Revenue

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, 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 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.

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. When identifying individual performance obligations, the Company considers all goods promised in the
contract regardless of whether explicitly stated in the customer contract or implied by customary business practices. The Company’s contracts with customers
require it to transfer an individual distinct product, which represents a single performance obligation. The Company’s performance obligation with respect to its
product sales is satisfied at a point in time, which transfers control upon delivery of EXPAREL and ZILRETTA to its customers. The Company considers
control to have transferred upon delivery because the customer has legal title to the asset, physical possession of the asset has been transferred, the customer has
significant risks and rewards of ownership of the asset and the Company has a present right to payment at that time.

Disaggregated Revenue

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

Net product sales:

EXPAREL
ZILRETTA
iovera°
Bupivacaine liposome injectable suspension

Total net product sales

2022

Year Ended December 31,
2021

2020

$

$

536,899  $
105,517 
15,258 
6,476 
664,150  $

506,515  $
12,683 
16,162 
3,606 
538,966  $

413,338 
— 
8,817 
4,459 
426,614 

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-18

Table of Contents

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 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. after completing the merger.

The total consideration for the Flexion Acquisition was approximately $578.8 million consisting of: (i) $448.5 million of cash paid to former Flexion

stockholders and to settle restricted stock units and in-the-money stock options; (ii) an $85.1 million cash payment of Flexion debt not 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. 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;

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

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

(iv) $1.00 per CVR upon approval by the U.S. Food and Drug Administration, or FDA, of a Biologics License Application (BLA) for PCRX-201, a

clinical stage gene therapy product candidate; and

(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):

Fair Value of Purchase Price Consideration
Fair value of purchase consideration paid at closing:

Cash consideration for all outstanding shares of Flexion’s common stock (50,392 shares of common stock acquired at $8.50
per share)
Cash consideration paid to settle RSUs and in-the-money stock options
Cash paid to settle Flexion debt

Fair value of CVRs

Total purchase consideration

Amount

428,333 

20,153 
85,118 
533,604 
45,241 
578,845 

$

$

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. | 2022 Form 10-K | Page F-19

Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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
(a)
reported) 

Measurement Period
Adjustments 

(b)

Amounts Recognized at the
Acquisition Date 
(as adjusted)

ASSETS ACQUIRED
Cash and cash equivalents
Short-term available-for-sale investments
Accounts receivable
Inventories
Prepaid expenses and other assets
Fixed assets
Deferred tax assets
Right-of-use assets
Identifiable intangible assets
IPR&D

Total assets

LIABILITIES ASSUMED
Accounts payable
Accrued expenses
Deferred revenue
Lease liabilities
Other liabilities
Long-term debt
Total liabilities
Total identifiable net assets acquired

Goodwill

Total consideration transferred

$

$

$

$

113,562  $
11,153 
32,838 
29,667 
4,852 
23,307 
58,015 
6,585 
480,000 
61,000 
820,979  $

9,794  $

22,746 
10,000 
6,585 
1,187 
201,450 
251,762 
569,217 
9,628 
578,845  $

—  $
— 
— 
— 
— 
— 
(16,906)
— 
— 
— 
(16,906) $

—  $

1,162 
— 
— 
— 
— 
1,162 
(18,068)
18,068 

—  $

113,562 
11,153 
32,838 
29,667 
4,852 
23,307 
41,109 
6,585 
480,000 
61,000 
804,073 

9,794 
23,908 
10,000 
6,585 
1,187 
201,450 
252,924 
551,149 
27,696 
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). The identifiable finite-lived intangible asset, ZILRETTA, is a developed technology for OA knee pain with a value of
$480.0 million and a useful life of 9.7 years. A discount rate of 17.5% was used in calculating the fair value of this technology. The IPR&D asset relates to the
use of ZILRETTA for the treatment of OA pain of the shoulder and was valued at $60.0 million. The projected cash flows for this asset were adjusted for the
probability of successful development and commercialization, and were discounted at 18.0%.

The excess of the purchase price over the fair value of identifiable net assets acquired represents goodwill. This goodwill is primarily attributable to the

value of combining ZILRETTA with iovera° and EXPAREL as a safe and effective non-opioid multimodal regimen for pain management, as well as the
synergies of merging operations. The acquired goodwill and intangible assets are 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. | 2022 Form 10-K | Page F-20

Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

Unaudited Pro Forma Summary of Operations

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

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

Total revenues
Net loss
Pro forma basic and diluted net loss per share

Year Ended December 31,

2021

2020

$

$

630,942  $
(67,264)

(1.52) $

515,199 
(19,711)
(0.46)

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

information of the Company and Flexion. The summary pro forma financial information primarily reflects the following pro forma adjustments:

• Removal of the acquisition-related transaction fees and costs, including certain stock-based compensation and other compensation expenses related to

the acquisition, from the years ended December 31, 2021 and 2020;

• 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 a step-up value in inventory;

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

• Additional depreciation of Flexion’s fixed assets; and

• Additional lease expense on Flexion’s ROU assets.

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

NOTE 6—INVENTORIES

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

Raw materials
Work-in-process
Finished goods

  Total

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-21

December 31,

2022

2021

$

$

39,810  $
28,853 
27,400 
96,063  $

36,337 
35,182 
27,031 
98,550 

 
 
Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 7—FIXED ASSETS

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

December 31,

2022

2021

Machinery and equipment
Leasehold improvements
Computer equipment and software
Office furniture and equipment
Construction in progress 

117,264 
59,740 
13,197 
2,883 
80,557 
273,641 
(85,240)
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.

118,684  $
61,302 
15,360 
2,420 
103,226 
300,992 
(117,480)
183,512  $

Less: accumulated depreciation

Fixed assets, net

Total

$

$

(1)

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, 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, 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. | 2022 Form 10-K | Page F-22

 
 
 
Table of Contents

NOTE 8—LEASES

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

Operating Lease Costs
Fixed lease costs
Variable lease costs
Sublease income

   Total

2022

Year Ended December 31,
2021

2020

$

$

13,949  $
1,988 
(253)
15,684  $

11,976  $
1,722 
— 
13,698  $

10,055 
2,096 
— 
12,151 

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

Cash paid for operating lease liabilities, net of lease incentives
Right-of-use assets recorded in exchange for lease obligations

2022

Year Ended December 31,
2021

2020

$
$

14,357  $
3,324  $

12,709  $
8,692  $

14,347 
42,191 

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

Weighted average remaining lease term
Weighted average discount rate

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

Year
2023
2024
2025
2026
2027
Thereafter
   Total future lease payments
   Less: imputed interest

   Total operating lease liabilities

December 31,

2022
6.83 years
7.05%

2021
7.77 years
6.96%

Aggregate Minimum Payments Due

$

$

14,022 
13,928 
13,078 
12,814 
12,586 
27,350 
93,778 
(19,855)
73,923 

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-23

Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 9—GOODWILL AND INTANGIBLE ASSETS

Goodwill

The Company’s goodwill results from the acquisition of Pacira Pharmaceuticals, Inc. from SkyePharma Holding, Inc. (now a subsidiary of Vectura Group

plc), or Skyepharma, in 2007 (the “Skyepharma Acquisition”), the MyoScience Acquisition in 2019 and the Flexion Acquisition in 2021. The change in the
carrying value of the Company’s goodwill is summarized as follows (in thousands):

Balance at December 31, 2020
   Goodwill arising from milestones achieved under the Skyepharma Acquisition
   Goodwill arising from the Flexion Acquisition
Balance at December 31, 2021
   Goodwill arising from measurement period adjustments associated with the Flexion Acquisition (Note 5)

Balance at December 31, 2022

Carrying Value

99,547 
36,000 
9,628 
145,175 
18,068 
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. In connection with the Skyepharma Acquisition, the Company agreed to certain milestone payments
for DepoBupivacaine products, including EXPAREL. In the fourth quarter of 2021, the Company met both of its two remaining milestones due to Skyepharma:
$4.0 million upon the first commercial sale in the U.K., France, Germany, Italy or Spain, which was paid in the fourth quarter of 2021; and $32.0 million when
annual net sales collected reached $500.0 million, which was paid in the first quarter of 2022. These milestone payments were treated as additions to the
Skyepharma Acquisition and, therefore, recorded as goodwill.

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, 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
Developed technologies
Customer relationships

Total finite-lived intangible assets, net

Acquired IPR&D

Total intangible assets, net

December 31, 2021
Developed technology
Customer relationships

Total finite-lived intangible assets, net

Acquired IPR&D

Total intangible assets, net

Gross
Carrying Value

Accumulated
Amortization

Intangible
Assets, Net

590,000  $
90 
590,090 
34,866 
624,956  $

(84,376) $
(34)
(84,410)
— 
(84,410) $

505,624 
56 
505,680 
34,866 
540,546 

Gross
Carrying Value

Accumulated
Amortization

Intangible
Assets, Net

590,000  $
90 
590,090 
61,000 
651,090  $

(27,097) $
(25)
(27,122)
— 
(27,122) $

562,903 
65 
562,968 
61,000 
623,968 

$

$

$

$

Weighted-Average 
Useful Lives
10 years, 5 months
10 years

Weighted-Average 
Useful Lives
10 years, 5 months
10 years

Amortization expense on intangible assets for the years ended December 31, 2022 and 2021 was $57.3 million and $13.6 million, respectively. 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. | 2022 Form 10-K | Page F-24

 
 
 
 
 
 
 
 
Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

Accrued expenses consist of the following (in thousands):

Accrued selling, general and administrative expenses
Accrued research and development expenses
Other accrued operating expenses
Compensation and benefits
Termination fee 
Accrued royalties 
Accrued interest
Product returns and wholesaler service fees

 (1)

(3)

(2)

Total

December 31,

2022

2021

11,927  $
4,065 
14,959 
26,198 
13,000 
3,400 
8,941 
7,295 
89,785  $

12,063 
5,480 
14,912 
45,491 
— 
35,298 
5,358 
8,953 
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 paid in the first quarter of 2022. See Note 9, Goodwill and Intangible Assets, for
more information.

NOTE 11—DEBT

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

Term loan B facility maturing December 2026
0.750% Convertible senior notes due August 2025
3.375% Convertible senior notes due May 2024
2.375% Convertible senior notes due April 2022 

(1)

     Total

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

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-25

December 31,

2022

2021

284,704  $
396,126 
8,641 
— 
689,471  $

359,497 
330,627 
201,249 
157,857 
1,049,230 

$

$

 
 
Table of Contents

Term Loan B Facility

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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.

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

Term Loan maturing December 2026
Deferred financing costs
Discount on debt

     Total debt, net of debt discount and deferred financing costs

December 31,

2022

2021

$

$

296,875  $
(3,919)
(8,252)
284,704  $

375,000 
(4,443)
(11,060)
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 $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. The Term Loan also contains customary affirmative and negative
covenants, financial covenants, representations and warranties, events of default and other provisions. As of December 31, 2022, the Company was in
compliance with all financial covenants under the Credit Agreement.

The Company may elect to borrow either term benchmark borrowings or alternate base rate borrowings. 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) 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 with Computershare Corporate Trust, N.A. (formerly Wells Fargo Bank, N.A.), or 2025 Indenture, with
st
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  and August 1  of
each year, beginning on February 1, 2021. The 2025 Notes mature on August 1, 2025.

st

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-26

Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

0.750% convertible senior notes due August 2025
Deferred financing costs
Discount on debt

Total debt, net of debt discount and deferred financing costs

December 31,

2022

2021

402,500  $
(6,374)
— 
396,126  $

402,500 
(7,155)
(64,718)
330,627 

$

$

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; (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; 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.

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). 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 2025 Notes is 13.9324 shares of common stock per $1,000 principal
amount, which is equivalent to an initial conversion price of $71.78 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 2025 Notes represents a premium of
approximately 32.5% to the closing sale price of $54.17 per share of the Company’s common stock on the Nasdaq Global Select Market on July 7, 2020, the
date that the Company priced the private offering of the 2025 Notes.

As of December 31, 2022, the 2025 Notes had a market price of $908 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 further stock price appreciation. Upon the receipt of conversion requests, the
settlement of the 2025 Notes will be paid pursuant to the terms of the 2025 Indenture. In the event that all of the 2025 Notes are converted, the Company would
be required to repay the $402.5 million in principal value and any conversion premium in any combination of cash and shares of its common stock (at the
Company’s option).

Prior to August 1, 2023, the Company may not redeem the 2025 Notes. On or after August 1, 2023 (but, in the case of a redemption of less than all of the
outstanding 2025 Notes, no later than the 40  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

th

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-27

Table of Contents

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. No
sinking fund is provided for the 2025 Notes.

If the Company undergoes a fundamental change, as defined in the 2025 Indenture, subject to certain conditions, holders of the 2025 Notes may require

the Company to repurchase for cash all or part of their 2025 Notes at a repurchase price equal to 100% of the principal amount of the 2025 Notes to be
repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if a make-whole fundamental change
occurs prior to August 1, 2025, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its notes in
connection with the make-whole fundamental change.

The 2025 Notes are the Company’s general unsecured obligations that rank senior in right of payment to all of its indebtedness that is expressly
subordinated in right of payment to the 2025 Notes, and equal in right of payment to the Company’s unsecured indebtedness. The 2025 Notes are also
effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and are
structurally subordinated to any debt or other liabilities (including trade payables) of the Company’s subsidiaries.

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

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

Convertible Senior Notes Due 2024 Assumed from the Flexion Acquisition

Prior to the Flexion Acquisition, 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

Table of Contents

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.
As a result of the Flexion Acquisition, and in connection with the Notice (as defined below), holders of the Flexion 2024 Notes became entitled to certain
Flexion Acquisition-related conversion and repurchase rights, as discussed below. In addition, as a result of the Flexion Acquisition and as discussed in more
detail below, any future conversion rights are subject to the occurrence of any future events giving rise to such conversion rights under the Flexion Indenture.

On December 6, 2021, as a result of the Flexion Acquisition and in accordance with the Flexion Indenture, Flexion provided a Fundamental Change
Company Notice and Offer to Purchase (the “Notice”) to the holders of the Flexion 2024 Notes and offered to repurchase for cash all of the outstanding Flexion
2024 Notes, at a repurchase price in cash equal to 100% of the principal amount of the Flexion 2024 Notes being repurchased, plus accrued and unpaid interest
thereon to, but excluding, January 7, 2022, subject to the terms and conditions set forth therein. The offer to purchase expired at 5:00 p.m., New York City time,
on January 6, 2022, as scheduled.

Any holder that did not exercise its repurchase right in accordance with the terms of the Notice retained the conversion rights associated with such
holder’s Flexion 2024 Notes under the Flexion Indenture. For conversion of Flexion 2024 Notes in connection with the Fundamental Change and the Make-
Whole Fundamental Change (each as defined in the Flexion Indenture) resulting from the Flexion Acquisition, each $1,000 principal amount of the Flexion
2024 Notes was convertible into (i) $317.40 in cash and (ii) 37.3413 CVRs, based on the conversion rate of 37.3413, prior to 5:00 p.m., New York City time,
on January 7, 2022. Alternatively, holders could retain their Flexion 2024 Notes and such Flexion 2024 Notes would remain outstanding subject to their
existing terms, including with respect to a holder’s right to receive interest payments on the Flexion 2024 Notes and exercise any future conversion rights that
may arise under the Flexion Indenture.

On January 7, 2022, following the expiration of the offer to purchase, the Company accepted the $192.6 million aggregate principal amount of Flexion
2024 Notes that were validly tendered (and not validly withdrawn). No Flexion 2024 Notes were converted in connection with the Notice. 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 with respect to the 2022 Notes. The 2022 Notes accrued interest at a fixed rate of 2.375% per year, payable
semiannually in arrears on April 1  and October 1  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.

st

st

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

2.375% convertible senior notes due April 2022
Deferred financing costs
Discount on debt

Total debt, net of debt discount and deferred financing costs

December 31,

2022

2021

—  $
— 
— 
—  $

160,000 
(223)
(1,920)
157,857 

$

$

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. | 2022 Form 10-K | Page F-29

 
 
Table of Contents

Interest Expense

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

The following table sets forth the total interest expense recognized in the periods presented (dollar amounts in thousands):

Contractual and other interest expense
Amortization of debt issuance costs
Amortization of debt discount
Capitalized interest and other (Note 7)

     Total

Effective interest rate on total debt

2022

Year Ended December 31,
2021

2020

$

$

36,880 
4,400 
2,807 
(4,111)
39,976 

$

$

9,759 
2,754 
23,152 
(3,915)
31,750 

$

$

7,650 
2,156 
18,254 
(2,389)
25,671 

5.47 %

6.66 %

7.15 %

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

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or be paid to transfer a liability in the principal or most advantageous market in an

orderly transaction. To increase consistency and comparability in fair value measurements, the FASB established a three-level hierarchy which requires an
entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of fair value
measurements are:

•

•

•

Level 1: Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value
hierarchy gives the highest priority to Level 1 inputs.

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

Level 3: Unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the lowest priority to
Level 3 inputs.

The carrying value of financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximate their respective

fair values due to the short-term nature of these items. The fair value of the Company’s 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 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

Table of Contents

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):

Financial Assets and Financial Liabilities Measured at Fair Value on a
Recurring Basis:
Financial Asset:
  Equity investments
  Convertible notes receivable
Financial Liabilities:

 Acquisition-related contingent consideration

Financial Liabilities Measured at Amortized Cost:

Term loan B facility due December 2026
0.750% convertible senior notes due 2025
3.375% convertible senior notes due 2024 

 (1)

(2)

Carrying
Value

Fair Value Measurements Using

Level 1

Level 2

Level 3

$
$

$

$
$
$

15,877  $
5,315  $

28,122  $

284,704  $
396,126  $
8,641  $

—  $
—  $

—  $

—  $
—  $
—  $

—  $
—  $

—  $

292,422  $
365,269  $
8,641  $

15,877 
5,315 

28,122 

— 
— 
— 

(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. For more information, See Note 11, Debt.

Certain assets and liabilities are measured at fair value on a non-recurring basis, including assets and liabilities acquired in a business combination and
long-lived assets, which would be recognized at fair value if deemed impaired or if reclassified as assets held for sale. The fair value in these instances would
be determined using Level 3 inputs.

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):

Balance at December 31, 2020

Purchases
Divestiture of investment
Foreign currency adjustments
Balance at December 31, 2021

Purchases
Impairment
Foreign currency adjustments

Balance at December 31, 2022

Equity Investments
$

Convertible Notes
Receivable

Total

12,802  $
12,967 
(11,642)
— 
14,127 
11,750 
(10,000)
— 
15,877  $

$

—  $

4,220 
— 
(88)
4,132 
1,250 
— 
(67)
5,315  $

12,802 
17,187 
(11,642)
(88)
18,259 
13,000 
(10,000)
(67)
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. | 2022 Form 10-K | Page F-31

 
 
Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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, 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 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.

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

Table of Contents

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
Discount rates
Probability of payment for achievement of regulatory milestones
Projected year of achieving or expiration of regulatory milestones

Flexion Ranges Utilized as of 
December 31, 2022
14.9% to 15.1%
0% to 12.5%
2030

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

Balance at December 31, 2020

Contingent consideration related to the Flexion Acquisition
Fair value adjustments and accretion
Payments made or offset against amounts due

Balance at December 31, 2021

Fair value adjustments and accretion

Balance at December 31, 2022

Available-for-Sale Investments

Contingent
Consideration
Fair Value

28,346 
45,241 
(989)
(15,000)
57,598 
(29,476)
28,122 

$

$

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. | 2022 Form 10-K | Page F-33

 
 
Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

December 31, 2022 Investments:
Current:

Asset-backed securities
Commercial paper
U.S. federal agency bonds
U.S. government bonds

Subtotal
Noncurrent:

U.S. federal agency bonds
U.S. government bonds

Subtotal

Total

December 31, 2021 Investments:
Current:
   Asset-backed securities
   Commercial paper
   Corporate bonds

     Total

Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair Value
(Level 2)

$

6,836  $

134,423 
41,971 
2,003 
185,233 

22,783 
14,499 
37,282 
222,515  $

$

—  $
23 
— 
— 
23 

2 
— 
2 
25  $

(3) $

(386)
(337)
(18)
(744)

(66)
(9)
(75)
(819) $

6,833 
134,060 
41,634 
1,985 
184,512 

22,719 
14,490 
37,209 
221,721 

Cost

Gross
Unrealized
Gains

Gross
Unrealized
Losses

Fair Value
(Level 2)

$

$

3,182  $

57,533 
9,936 
70,651  $

—  $
80 
102 
182  $

—  $
(2)
— 
(2) $

3,1
57,6
10,0
70,8

At December 31, 2022, there were no investments available for sale that were materially less than their amortized cost.

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

Credit Risk

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%. For additional
information regarding the Company’s wholesalers, see Note 2, Summary of Significant Accounting Policies. 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. Allowances for credit losses on the Company’s accounts receivable are maintained based
on historical payment patterns, current and estimated future economic conditions, aging of accounts receivable and its write-off history. As of 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

 
 
 
 
 
 
 
Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 13—STOCKHOLDERS’ EQUITY

Common Stock

The Company is authorized to issue up to 250,000,000 shares of common stock, of which 45,927,790 and 44,734,308 were issued and outstanding at

December 31, 2022 and 2021, respectively.

Preferred Stock

The Company is authorized to issue up to 5,000,000 shares of preferred stock. No preferred stock was issued or outstanding at either December 31, 2022

or 2021.

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):

Balance at December 31, 2019

Net unrealized loss on investments
Foreign currency translation adjustments

Balance at December 31, 2020

Net unrealized loss on investments, net of tax
Foreign currency translation adjustments

(1)

Balance at December 31, 2021

Net unrealized loss on investments, net of tax
Foreign currency translation adjustments

(1)

Balance at December 31, 2022

Net Unrealized Gains
(Losses) From Available-
For-Sale Investments

Unrealized Foreign
Currency Translation

Accumulated Other
Comprehensive (Loss)
Income

$

$

322  $
(3)
— 
319 
(180)
— 
139 
(662)
— 
(523) $

—  $
— 
(1)
(1)
— 
29 
28 
— 
115 
143  $

322 
(3)
(1)
318 
(180)
29 
167 
(662)
115 
(380)

(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

Stock Incentive Plans

The Company’s amended and restated 2011 stock incentive plan, or 2011 Plan, was originally adopted by its board of directors and approved by its
stockholders in June 2011 and was amended in June 2014, June 2016, June 2019 and June 2021. The June 2021 amendment and approval by the Company’s
stockholders increased the number of shares of common stock authorized for issuance as equity awards under the plan by 1,500,000 shares.

The 2011 Plan allows the granting of incentive stock options, non-statutory stock options, restricted stock awards and other stock-based awards. In April

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

The Company’s stock option grants have an exercise price equal to the closing price of the Company’s common stock on the date of grant, generally have
a 10-year contractual term and vest in increments (typically over four years from the date of grant, although the Company may occasionally grant options with
different vesting terms, including grants made to its non-employee directors). The Company also grants RSUs to employees and non-employee directors
generally vesting in increments over four years from the date of grant, except for such grants made to non-employee directors. The Company uses authorized
but unissued shares of its common stock to satisfy its obligations under these plans.

Employee Stock Purchase Plan

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

Table of Contents

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 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. The maximum fair market value of stock which
can be purchased by a participant in a calendar year is $25,000. Six-month offering periods begin on January 1 and July 1 of each year. 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 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.

The following tables contain information about the Company’s stock incentive plans at December 31, 2022: 

Stock Incentive Plan
2011 Plan
2014 Inducement Plan

Total

Employee Stock Purchase Plan
ESPP

Stock-Based Compensation

Awards Reserved For
Issuance

Awards
Issued

Awards Available For
Grant

14,431,701 
175,000 
14,606,701 

13,858,585 
36,076 
13,894,661 

573,116 
138,924 
712,040 

Shares Reserved
For Purchase

Shares
Purchased

Shares Available
For Purchase

1,000,000 

480,350 

519,650 

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 on a straight-line expense attribution method over the length of an
offering period.

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):

Cost of goods sold
Research and development
Selling, general and administrative

Total

Stock-based compensation from:

Stock options
RSUs
ESPP

Total

Related income tax benefit

2022

Year Ended December 31,
2021

2020

5,967  $
6,594 
35,531 
48,092  $

26,800  $
20,310 
982 
48,092  $

5,891  $
5,465 
30,890 
42,246  $

25,980  $
15,335 
931 
42,246  $

5,589 
5,211 
29,120 
39,920 

26,749 
12,266 
905 
39,920 

10,219  $

8,989  $

8,578 

$

$

$

$

$

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-36

 
 
Table of Contents

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:

Number of
Stock Options

Weighted
Average
Exercise Price (Per
Share)

Weighted Average
Remaining
Contractual
Term (Years)

Aggregate
Intrinsic Value
(in Thousands)

Outstanding at December 31, 2019

Granted
Exercised
Forfeited
Expired

Outstanding at December 31, 2020

Granted
Exercised
Forfeited
Expired

Outstanding at December 31, 2021

Granted
Exercised
Forfeited
Expired

Outstanding at December 31, 2022

Exercisable at December 31, 2022

Vested and expected to vest as of December 31, 2022

6,706,378  $
1,502,803 
(1,428,111)
(426,925)
(119,027)
6,235,118 
890,277 
(732,117)
(278,233)
(64,505)
6,050,540 
1,061,630 
(689,464)
(113,506)
(36,206)
6,272,994  $

4,224,921  $

6,272,994  $

42.80 
47.50 
31.67 
42.08 
71.71 
45.98 
60.27 
32.56 
46.46 
80.31 
49.32 
59.99 
35.37 
54.97 
79.90 
52.38 

50.51 

52.38 

7.05 $

$

50,652 

34,227 

6.97 $

102,955 

$

23,967 

6.59 $

$

6.28 $

5.17 $

6.28 $

81,407 

23,983 

2,011 

1,997 

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

The weighted average fair value of stock options granted for the years ended December 31, 2022, 2021 and 2020 was $25.60, $26.74 and $22.40 per
share, respectively. The fair values of stock options granted were estimated using the Black-Scholes model with the following weighted average assumptions:

Black-Scholes Weighted Average Assumption
Expected dividend yield
Risk-free interest rate
Expected volatility
Expected term of options

2022
None
1.37% - 4.17%
45.1%
4.92 years

Year Ended December 31,
2021
None
0.43% - 1.21%
49.1%
5.36 years

2020
None
0.22% - 1.60%
53.5%
5.36 years

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-37

 
 
 
 
 
 
 
 
   
 
   
 
 
Table of Contents

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:

Unvested at December 31, 2019

Granted
Vested
Forfeited

Unvested at December 31, 2020

Granted
Vested
Forfeited

Unvested at December 31, 2021

Granted
Vested
Forfeited

Unvested and expected to vest as of December 31, 2022

Number of
Restricted Stock
Units

Weighted
Average Grant
Date Fair Value (Per
Share)

631,141  $
665,476 
(239,085)
(100,079)
957,453 
446,450 
(309,779)
(138,847)
955,277 
621,149 
(331,196)
(95,768)
1,149,462  $

41.87  $
48.70 
41.91 
44.43 
46.34  $
60.81 
45.16 
50.67 
52.85  $
60.11 
50.25 
56.00 

57.26  $

Aggregate
Intrinsic Value
(in Thousands)

28,591 

57,294 

57,479 

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. The Company’s RSUs have a maximum vest date of four years from the date of grant. The fair values of RSUs awarded are equal
to the closing price of the Company’s common stock on the date of grant.

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

Black-Scholes Weighted Average Assumption
ESPP share option fair value
Expected dividend yield
Risk-free interest rate
Expected volatility
Expected term of ESPP share options

2022
$15.26 - $15.86
None
0.22% - 2.52%
39.5%
6 months

Year Ended December 31,
2021
$15.16 - $15.23
None
0.50% - 0.90%
37.0%
6 months

2020
$11.02 - $17.54
None
0.14% - 1.57%
44.9%
6 months

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-38

 
Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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):

Numerator:
Net income—basic
Denominator:
Weighted average common shares outstanding—basic
Computation of diluted securities:
Dilutive effect of stock options
Dilutive effect of RSUs
Dilutive effect of conversion premium on the 2022 Notes
Dilutive effect of ESPP purchase options

Weighted average common shares outstanding—diluted
Net income per share:
Basic net income per common share
Diluted net income per common share

2022

Year Ended December 31,
2021

2020

$

15,909  $

41,980  $

145,523 

45,521 

787 
226 
— 
4 
46,538 

44,262 

1,030 
298 
38 
2 
45,630 

$
$

0.35  $
0.34  $

0.95  $
0.92  $

42,671 

783 
227 
— 
1 
43,682 

3.41 
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):

Weighted average number of stock options
Convertible senior notes 
Weighted average number of RSUs
Weighted average ESPP purchase options

(1)

     Total

2022

Year Ended December 31,
2021

2020

2,821 
6,206 
417 
7 
9,451 

2,141 
— 
116 
13 
2,270 

4,237 
— 
99 
16 
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. | 2022 Form 10-K | Page F-39

 
 
 
 
 
 
 
Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

NOTE 16—INCOME TAXES

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

Income (loss) before income taxes:
   Domestic
   Foreign

      Total income before income taxes

Current taxes:
   Federal
   State
   Foreign
      Total current taxes
Deferred taxes:
   Federal
   State
      Total deferred taxes

      Total income tax (benefit) expense

2022

Year Ended December 31,
2021

2020

21,068  $
(7,766)
13,302  $

—  $

5,309 
29 
5,338  $

(2,781) $
(5,164)
(7,945) $

64,751  $
(8,347)
56,404  $

—  $

3,533 
19 
3,552  $

12,554  $
(1,682)
10,872  $

17,000 
3,089 
20,089 

(6)
1,185 
— 
1,179 

(99,164)
(27,449)
(126,613)

(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):

2022

Year Ended December 31,
2021

2020

Amount

Tax Rate

Amount

Tax Rate

Amount

Tax Rate

U.S. statutory rate applied to income
before taxes
State taxes
Foreign taxes
Executive compensation
Change in valuation allowance
Stock-based compensation
Tax credits
Interest expense
Contingent consideration
Nondeductible expenses
Reserves
Convertible debt
Other
Income tax (benefit) expense and
effective tax rate

$

$

2,793 
(448)
248 
1,267 
2,871 
(1,795)
(2,542)
(3,477)
(3,841)
1,164 
984 
— 
169 

(2,607)

21.00 % $
(3.37)%
1.86 %
9.53 %
21.58 %
(13.49)%
(19.11)%
(26.14)%
(28.88)%
8.75 %
7.40 %
— %
1.27 %

11,845 
2,154 
(651)
719 
3,695 
(2,144)
(1,690)
— 
247 
1,929 
(738)
— 
(942)

21.00 % $
3.82 %
(1.15)%
1.27 %
6.55 %
(3.80)%
(3.00)%
— %
0.44 %
3.42 %
(1.31)%
— %
(1.67)%

4,219 
632 
639 
765 
(130,150)
(216)
(1,591)
— 
— 
149 
1,539 
(1,048)
(372)

21.00 %
3.15 %
3.18 %
3.81 %
(647.87)%
(1.08)%
(7.92)%
— %
— %
0.74 %
7.66 %
(5.22)%
(1.84)%

(19.60)% $

14,424 

25.57 % $

(125,434)

(624.39)%

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-40

 
 
Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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.

Significant components of the Company’s deferred tax assets and liabilities at December 31, 2022 and 2021 are as follows (in thousands):

Deferred tax assets:

Net operating loss carryforwards
Federal and state credits
Accruals and reserves
Stock based compensation
Deferred revenue
Inventory reserves
Other

Total deferred tax assets
Deferred tax liabilities:

Depreciation and amortization
Discount on convertible senior notes

Total deferred tax liabilities
Deferred tax assets, net of deferred tax liabilities
Less: valuation allowance

Net deferred tax assets

December 31,

2022

2021

151,495  $
23,098 
19,979 
27,473 
— 
4,889 
11,036 
237,970 

(54,743)
13 
(54,730)
183,240 
(22,931)
160,309  $

174,203 
35,414 
29,691 
24,545 
2,430 
572 
2,441 
269,296 

(81,418)
(15,521)
(96,939)
172,357 
(18,993)
153,364 

$

$

As of December 31, 2022, the Company’s federal net operating losses, or NOLs, and federal tax credit carryforwards totaled $571.8 million and $16.6

million, respectively. 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 federal and state NOLs will begin to expire in 2032
and 2028, respectively. The Company had non-U.S. tax NOLs of $6.5 million at December 31, 2022. The non-U.S. 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 NOLs, 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, other financing transactions and the Flexion Acquisition in 2021. 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. These judgments are based on projections of future income—including tax-planning strategies—by individual tax jurisdictions. 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 $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.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-41

 
 
 
 
Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 as December 31, 2020

Reduction for prior year positions
Additions for current year positions

Balance at December 31, 2021

Reduction for prior year positions
Additions for current year positions

Balance at December 31, 2022

Unrecognized
Tax Benefit

6,076 
(1,355)
4,300 
9,021 
(3,526)
827 
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. Due to the Company’s tax credit carryforwards, the reserve was recorded as a reduction of the Company’s deferred tax assets,
and any potential deficiency would not result in a tax liability. Therefore, no interest or penalties were recognized in income tax expense for the years ended
December 31, 2022, 2021 and 2020.

The Company is currently subject to audit by the U.S. Internal Revenue Service, or IRS, for the years 2019 through 2022, and state tax jurisdictions for
the years 2018 through 2022. However, the IRS or states may still examine and adjust an NOL arising from a closed year to the extent it is utilized in a year
that remains subject to audit. The Company’s previously filed income tax returns are not presently under audit by the IRS or state tax authorities.

NOTE 17—EMPLOYEE BENEFIT PLANS

401(k) Plan

The Company’s 401(k) plan is a deferred salary arrangement under section 401(k) of the IRC. Under the 401(k) plan, participating U.S. employees may

defer a portion of their pre-tax earnings which are eligible for a discretionary percentage match as defined in the 401(k) plan and determined by the Company’s
board of directors (up to the maximum amount permitted by the IRC). The Company recognized $3.4 million, $2.8 million and $2.9 million of related
compensation expense for its 401(k) discretionary match for the years ended December 31, 2022, 2021 and 2020, respectively.

Deferred Compensation Plan

In June 2020, the Company’s board of directors adopted the Company’s Deferred Compensation Plan, or DCP. The Company intends that the DCP
constitute, and be construed and administered as, an unfunded plan of deferred compensation within the meaning of the Employee Retirement Income Security
Act of 1974, as amended, and the IRC of 1986, as amended, under which eligible participants may elect to defer the receipt of current compensation. Eligible
participants include select management and highly compensated employees of the Company, including the Company’s named executive officers. Pursuant to
the DCP, subject to any minimum and maximum deferral requirements that the administrator of the DCP may establish, participants may elect to defer their
base salary and annual incentive awards. In addition to elective deferrals, the DCP permits the Company to make matching and certain other discretionary
contributions to the participants. 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

 
Table of Contents

Cash Long-Term Incentive Plan

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

objective performance goals. The LTIP provides cash awards to participants based on the achievement of certain performance goals during each applicable
performance period from January 1 through December 31 of each calendar year. Award amounts ranging from 0% to 225% of the target cash award 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. 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):

Severance-related expenses
Acquisition-related fees
Other acquisition expenses

Total acquisition-related charges
Flexion contingent consideration
MyoScience contingent consideration
Impairment of acquired IPR&D
Termination of license agreement
Nuance Biotech Co. Ltd. agreement dissolution costs
Discontinuation of DepoCyt(e)

Total acquisition-related charges (gains), impairment and other

Flexion Acquisition

2022

Year Ended December 31,
2021

2020

$

$

4,494  $
1,032 
5,719 
11,245 
(18,292)
(11,184)
26,134 
3,000 
— 
— 
10,903  $

26,371  $
10,963 
3,566 
40,900 
1,174 
(2,163)
— 
— 
3,000 
— 
42,911  $

— 
— 
150 
150 
— 
5,204 
— 
— 
— 
(188)
5,166 

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 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. | 2022 Form 10-K | Page F-43

Table of Contents

PACIRA BIOSCIENCES, INC.
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. Ltd.

In June 2018, the Company entered an agreement with Nuance Biotech Co. Ltd., or Nuance, a China-based specialty pharmaceutical company, to advance

the development and commercialization of EXPAREL in China. Under the terms of the agreement, the Company had granted Nuance the exclusive rights to
develop and commercialize EXPAREL. In April 2021, the Company and Nuance agreed to a mutual termination of the agreement due to the lack of a viable
regulatory pathway that adequately safeguards the Company’s intellectual property against the risk of a generic product, which included dissolution costs of
$3.0 million during the year ended December 31, 2021.

DepoCyt(e) Discontinuation

In April 2018, the Company received formal notice of the termination of a Supply Agreement and a Distribution Agreement (and all related agreements as

subsequently amended) from Mundipharma International Corporation Limited and Mundipharma Medical Company, respectively (collectively,
“Mundipharma”). In November 2019, the Company reached a settlement with Mundipharma and made a $5.3 million payment related to the DepoCyt(e)
discontinuation which had previously been accrued.

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

Thermo Fisher Scientific Pharma Services

In April 2014, the Company and Thermo Fisher entered into a Strategic Co-Production Agreement, a Technical Transfer and Service Agreement (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 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 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 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. Unless earlier terminated (other than termination by the Company in the event that Thermo Fisher
does not

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-44

Table of Contents

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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.

In June 2021, the Company entered into a distribution agreement with Eurofarma Laboratories S.A., or Eurofarma, for the development and
commercialization of EXPAREL in Latin America. Under the terms of the agreement, Eurofarma obtained the exclusive right to market and distribute
EXPAREL in 19 countries in Latin America, including Argentina, Brazil, Colombia and Mexico. In addition, Eurofarma is responsible for regulatory filings for
EXPAREL in these countries. The Company received a $0.3 million upfront payment that is partially refundable upon certain circumstances and will receive
royalties based on Eurofarma’s future commercialization of the product and is also eligible to receive milestone payments that are triggered by the achievement
of certain regulatory and commercial events. The Company recognized $0.1 million of collaborative licensing and milestone revenue in its consolidated
statements of operations during the year ended December 31, 2021.

Verve Medical Products, Inc.

In July 2021, the Company entered into a licensing agreement with Verve Medical Products, Inc. for the distribution of iovera° in Canada. The Company

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

DePuy Synthes Sales, Inc.

In January 2017, the Company announced a Co-Promotion Agreement with DePuy Synthes Sales, Inc., or DePuy Synthes, part of the Johnson & Johnson

family of companies, to market and promote the use of EXPAREL for orthopedic procedures in the U.S. DePuy Synthes field representatives, specializing in
joint reconstruction, spine, sports medicine, trauma and cranio-maxillofacial (CMF) procedures, collaborated with and supplemented the Company’s field
teams by expanding the reach and frequency of EXPAREL education in the hospital surgical suite and ambulatory surgery center settings.

In July 2020, the Company notified DePuy Synthes that the Co-Promotion Agreement would terminate on January 2, 2021. The Company recorded

termination-related costs of $8.8 million which were recorded in selling, general and administrative expense during the year ended December 31, 2020.

Aratana Therapeutics, Inc.

In December 2012, the Company entered into a worldwide license, development and commercialization agreement with Aratana Therapeutics, Inc., a
wholly owned subsidiary of Elanco Animal Health, Inc., or Aratana. Under the agreement, the Company granted Aratana an exclusive royalty-bearing license,
including the limited right to grant sublicenses, for the development and commercialization of the Company’s bupivacaine liposome injectable suspension
product for veterinary use. Under the agreement, Aratana developed and obtained FDA approval for the use of the product in veterinary surgery to manage
postsurgical pain. The Company is eligible to receive from Aratana up to an aggregate of $40.0 million upon the achievement of commercial milestones.
Aratana is required to pay the Company a tiered double-digit royalty on certain net sales made in the U.S. If the product is approved by foreign regulatory
agencies for sale outside of the U.S., Aratana will be required to pay the Company a tiered double-digit royalty on such net sales. Royalty rates will be reduced
by a certain percentage upon the entry of a generic competitor for animal health indications into certain jurisdictions or if Aratana must pay royalties to third
parties under certain circumstances. Unless terminated earlier pursuant to its terms, the license agreement is effective until July 2033, after which Aratana has
the option to extend the agreement for an additional five-year term, subject to certain requirements.

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.

NOTE 20—COMMITMENTS AND CONTINGENCIES

Legal Proceedings

From time to time, the Company has been and may again become involved in legal proceedings arising in the ordinary course of its business, including

those related to patents, product liability and government investigations. 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

Table of Contents

MyoScience Milestone Litigation

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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 “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. The
Company believes that the counterclaim from Fortis is without merit and intends to vigorously defend against all claims. The Company is unable to predict the
outcome of this action at this time.

eVenus Pharmaceutical Laboratories Litigations

In October 2021, the Company received a Notice Letter advising that eVenus Pharmaceutical Laboratories, Inc., or eVenus, of Princeton, New Jersey,

submitted to the FDA an Abbreviated New Drug Application (ANDA) with a Paragraph IV certification seeking authorization for the manufacturing and
marketing of a generic version of EXPAREL (266 mg/20 mL) in the U.S. prior to the expiration of U.S. Patent No. 11,033,495 (the ’495 patent).

In November 2021, the Company filed a patent infringement suit against eVenus and its parent company in the U.S. District Court for the District of New
Jersey (21-cv-19829) asserting infringement of the ’495 patent. This triggered an automatic 30-month stay of final approval of the eVenus ANDA. On January
6, 2022, eVenus filed an Answer with counterclaims to the Complaint, alleging the ’495 patent is invalid and/or not infringed through the manufacture, sale, or
offer for sale of the product described in product described in eVenus’s ANDA submission.

In December 2021, the Company received a second Notice Letter advising that eVenus submitted to the FDA an amendment to its ANDA with a
Paragraph IV Certification seeking authorization for the manufacturing and marketing of a generic version of EXPAREL (133 mg/10 mL) in the U.S. prior to
the expiration of the ’495 patent. In the Notice Letter, eVenus also advised that it submitted a Paragraph IV Certification to the FDA seeking authorization for
the manufacturing and marketing of a generic version of EXPAREL (266 mg/20 mL and 133 mg/10 mL) in the U.S. prior to the expiration of U.S. Patent No.
11,179,336 (the ’336 patent). eVenus further alleges in the Notice Letter that both the ’495 patent and the ’336 patent are invalid and/or not infringed.

In February 2022, the Company filed a second patent infringement suit against eVenus and its parent company in the U.S. District Court for the District of
New Jersey (22-cv-00718) asserting that the 133 mg/10 mL ANDA product will infringe the ’495 and ’336 patents and that the 266 mg/20 mL ANDA product
will infringe the ’336 patent. This filing triggered a second automatic 30-month stay of final approval for the 133 mg/10 mL ANDA product.

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

Research Development Foundation

Pursuant to an agreement with the Research Development Foundation, or RDF, the Company was required to pay RDF a low single-digit royalty on the

collection of revenues from certain products, for as long as certain patents assigned to the Company under the agreement remain valid. RDF has the right to
terminate the agreement for an uncured material breach by the Company, in connection with its bankruptcy or insolvency or if it directly or indirectly opposes
or disputes the validity of the assigned patent rights. The Company’s ’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 ended on
December 24, 2021 with the expiration of its U.S. Patent No. 9,585,838. Because of the disagreement over the interpretation of the agreement, in December
2021, the Company filed a declaratory judgment lawsuit in the U.S. District Court for the District of Nevada (21-cv-02241). The lawsuit seeks a declaration
from the court that the Company owes no royalties to RDF with respect to its EXPAREL product after December 24, 2021. During the pendency of the lawsuit,
the Company will continue to pay royalties to RDF under protest, however, the Company is unable to predict the outcome of this action at this time.

Pacira BioSciences, Inc. | 2022 Form 10-K | Page F-46

Table of Contents

Purchase Obligations

PACIRA BIOSCIENCES, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)

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

The FDA, as a condition of EXPAREL approval, has required the Company to study EXPAREL in pediatric patients, as well as the administration of

EXPAREL as a nerve block in the pediatric setting. The Company was granted a deferral for the required pediatric trials until after the indications were
approved in adults. Similarly, in Europe, the Company agreed with the European Medicines Agency, or EMA, on a Pediatric Investigation Plan as a prerequisite
for submitting a Marketing Authorization Application (MAA) in the E.U. Despite the U.K.’s withdrawal from the E.U., the agreed pediatric plan is applicable
in the U.K.

In December 2019, the Company announced positive results for its extended pharmacokinetic and safety study (“PLAY”) for local analgesia in children

aged six to 17 undergoing cardiovascular or spine surgeries. Those positive results were the basis for the submission of a supplemental New Drug Application,
or sNDA, in the U.S. and Type II variations in the E.U. and U.K. to expand the EXPAREL label to include use in patients six years of age and older for single-
dose infiltration to produce postsurgical local analgesia. In March 2021, the Company announced that the FDA approved the submission of the sNDA in the
U.S. The EMA and the Medicines and Healthcare Products Regulatory Agency, or MHRA, are still reviewing the Type II variations. The Company is working
with the FDA, MAA and MHRA to finalize the regulatory pathway for its remaining pediatric commitments.

Contingent Milestone Payments

Refer to Note 5, Flexion Acquisition and Note 12, Financial Instruments, for information on potential contingent milestone payments related to the

Flexion Acquisition and MyoScience Acquisition.

PCRX-201

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. | 2022 Form 10-K | Page F-47

Exhibit 10.25

AMENDMENT NO. ONE
TO
PACIRA BIOSCIENCES, INC.
DEFERRED COMPENSATION PLAN

This Amendment No. One is made to the Pacira BioSciences, Inc. Deferred Compensation Plan (the “Plan”). The amendment set forth
herein is effective as of January 1, 2023. All terms defined in the Plan shall have the same meanings when used herein. All provisions of the Plan
not amended by this Amendment No. One shall remain in full force and effect.

1.    Effective with respect to Performance Periods (as defined in the Plan) commencing on or after January 1, 2023, Section 4.2 is

amended to read as follows:

4.2    Deferral of Bonuses. Subject to any minimum or maximum deferral requirements that the Administrator may establish, an
Eligible Employee may elect to defer receipt of all or any portion of any Bonus that he or she anticipates earning with respect to any
Performance Period. An Eligible Employee shall make such election by filing a completed Deferral Agreement with the Company in
accordance  with,  and  subject  to,  such  rules  and  procedures  as  the  Administrator  may  establish;  provided,  however  that  such  Deferral
Agreement  must  be  filed  with  the  Company  at  least  six  (6)  months  prior  to  the  end  of  the  Performance  Period  to  which  such  Bonus
relates (or by such earlier date as the Administrator may specify). Notwithstanding the foregoing, if an Eligible Employee first becomes
eligible to participate in the Plan during a Performance Period, such Eligible Employee cannot elect to defer any portion of any Bonus he
or she may earn with respect to such Performance Period.

2.    Section 7.2 is amended to read as follows:

7.2 Matching Amounts. Matching Amounts credited to a Participant’s Annual Account for a Plan Year pursuant to Section 5.1
shall become fully vested on April 1 of the second calendar year commencing after the end of such Plan Year, provided the Participant
remains continuously employed by an Employer or any Affiliate until such April 1. In addition, a Participant shall become fully vested in
such amounts prior to such April 1 if, prior to such date, he or she Terminates due to Retirement or becomes Disabled or dies while still
employed by the Employer or an Affiliate. Prior to becoming fully vested, a Participant shall have no vested interest in such amounts.

Pacira BioSciences, Inc has caused this Amendment No. One to be executed this 6  day of December, 2022.

th

*    *    *

PACIRA BIOSCIENCES, INC.

By: /s/ Kristen Williams

Its: Chief Administrative Officer and Secretary

-1-

 
 
 
 
The following is a complete listing of the subsidiaries of Pacira BioSciences, Inc., a Delaware corporation:

SUBSIDIARIES OF THE REGISTRANT

Domestic Subsidiaries
Pacira Pharmaceuticals, Inc.
Pacira CryoTech, Inc.
Pacira Therapeutics, Inc.
Pacira Pharmaceuticals International, Inc.

International Subsidiaries
Pacira Limited
Pacira Ireland Limited
Pacira Canada, Inc.

Exhibit 21.1

Jurisdiction of
Incorporation

California
Delaware
Delaware
Delaware

United Kingdom
Ireland
Québec, Canada

 
Consent of Independent Registered Public Accounting Firm

Exhibit 23.1

We consent to the incorporation by reference in the registration statements (Nos. 333-175101, 333-181986, 333-196542, 333-212098, 333-233141, 333-
258410, and 333-266532) on Form S-8 of our report dated February 28, 2023, with respect to the consolidated financial statements of Pacira BioSciences, Inc.
and the effectiveness of internal control over financial reporting.

/s/ KPMG LLP

Short Hills, NJ

February 28, 2023

 
 
 
 
Exhibit 31.1

I, David Stack, certify that:

1.     I have reviewed this annual report on Form 10-K of Pacira BioSciences, Inc. (the “Registrant”);

CERTIFICATION

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the

statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the

financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.     The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
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;

(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness

of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal

quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the Registrant’s internal control over financial reporting; and

5.     The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the

Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely

to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over

financial reporting.

Date:

February 28, 2023

/s/ DAVID STACK

David Stack
Chief Executive Officer and Chairman
(Principal Executive Officer)

Exhibit 31.2

I, Charles A. Reinhart, III, certify that:

1.     I have reviewed this annual report on Form 10-K of Pacira BioSciences, Inc. (the “Registrant”);

CERTIFICATION

2.     Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the

statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.     Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the

financial condition, results of operations and cash flows of the Registrant as of, and for, the periods presented in this report;

4.     The Registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in
Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the
Registrant and have:

(a) designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure
that material information relating to the Registrant, including its consolidated subsidiaries, is made known to us by others within those entities,
particularly during the period in which this report is being prepared;

(b) designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision,
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;

(c) evaluated the effectiveness of the Registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness

of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) disclosed in this report any change in the Registrant’s internal control over financial reporting that occurred during the Registrant’s most recent fiscal

quarter (the Registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect,
the Registrant’s internal control over financial reporting; and

5.     The Registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the

Registrant’s auditors and the audit committee of the Registrant’s board of directors (or persons performing the equivalent functions):

(a) all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely

to adversely affect the Registrant’s ability to record, process, summarize and report financial information; and

(b) any fraud, whether or not material, that involves management or other employees who have a significant role in the Registrant’s internal control over

financial reporting.

Date:

February 28, 2023

/s/ CHARLES A. REINHART, III

Charles A. Reinhart, III
Chief Financial Officer
(Principal Financial Officer)

CERTIFICATIONS OF THE CHIEF EXECUTIVE OFFICER AND CHIEF FINANCIAL OFFICER
PURSUANT TO 18 U.S.C. SECTION 1350, AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

Pursuant to 18 U.S.C. §1350, as adopted pursuant to §906 of the Sarbanes-Oxley Act of 2002, the undersigned certifies that this Annual Report on
Form 10-K of Pacira BioSciences, Inc. for the year ended December 31, 2022, fully complies with the requirements of Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 and that the information contained in this report fairly presents, in all material respects, the financial condition and results of operations
of Pacira BioSciences, Inc. at the dates and for the periods indicated.

Exhibit 32.1

Date:

February 28, 2023

/s/ DAVID STACK

David Stack
Chief Executive Officer and Chairman
(Principal Executive Officer)

Date:

February 28, 2023

/s/ CHARLES A. REINHART, III

Charles A. Reinhart, III
Chief Financial Officer
(Principal Financial Officer)