Pacira BioSciences, Inc. (PCRX) FY 2024 MD&A

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 2024 and 2023, as well as other discussions of 2024 and 2023 items. We have omitted discussion of the year ended December 31, 2022 (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 2023 and 2022 and other discussions of 2022 items can be found within Part II, Item 7, to our Annual Report for the year ended December 31, 2023, filed with the SEC on February 29, 2024, 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 corporate 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

Our stated corporate mission is to deliver innovative, non-opioid pain therapies to transform the lives of patients. 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) 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 a long-acting, non-opioid option proven to manage postsurgical pain. EXPAREL is the only product indicated for local analgesia via infiltration in patients aged six years and older and regional analgesia via interscalene brachial plexus nerve block, sciatic nerve block in the popliteal fossa and adductor canal block in adults. 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. 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. in November 2021 (the “Flexion Acquisition”), we acquired ZILRETTA® (triamcinolone acetonide extended-release injectable suspension), the first and only extended-release, intra-articular injectable 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. in April 2019 (the “MyoScience Acquisition”), 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 are also advancing the development of PCRX-201 (enekinragene inzadenovec), a novel gene therapy vector platform enabling local administration of genetic medicines with the potential to treat large prevalent diseases like OA. In February 2025, we acquired

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GQ Bio Therapeutics GmbH, a privately-held biopharmaceutical company (the “GQ Bio Acquisition”). PCRX-201 is the lead program from this platform.

We expect to continue to pursue the expanded use of EXPAREL, ZILRETTA and iovera° in additional procedures; progress our product candidate pipeline, including the development of PCRX-201; 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.

Recent Highlights

•In November 2024, we presented two-year safety and efficacy data at the American College of Rheumatology’s annual ACR Convergence meeting in Washington, DC. The new data is derived from an open-label, Phase 1 trial investigating the safety and efficacy of PCRX-201 administered via ultrasound-guided intraarticular injection in 72 patients with moderate to severe osteoarthritis of the knee (OAK) graded at 2, 3, or 4 on the Kellgren-Lawrence scale, a semiquantitative method for evaluating the severity of OA on a scale of 0-4. Participants were broken into two cohorts. The first cohort received one of three doses of PCRX-201. The second cohort received concurrent pretreatment with an IA corticosteroid (methylprednisolone 40 mg), a technique common in gene therapy dosing to improve tolerability and gene transfer. Pain and function benefits were observed at all doses and across both cohorts over the full two years studied, with patients in the second cohort achieving greater pain reduction and fewer AEs. Given these highly encouraging Phase 1 data, we opened enrollment in a randomized, double-blind Phase 2 clinical study in knee OA in February 2025.

•In December 2024, we announced the receipt of U.S. Patent No. 12,156,940 (the ‘940 patent) from the USPTO. The ‘940 patent—entitled “Manufacturing of Bupivacaine Multivesicular Liposomes”—protects the chemical composition of EXPAREL. This patent is the first patent from a new family of patents related to EXPAREL produced by our enhanced larger-scale manufacturing process in San Diego, California, which received approval from the FDA in February 2024. We expect the ‘940 patent to provide protection into July 2044. Additionally, the ‘940 patent is listed in the FDA’s “Approved Drug Products with Therapeutic Equivalence Evaluations” (the “Orange Book”). Patents that are eligible for Orange Book listing are those that have claims covering the active ingredient, the drug product (formulation and composition) or the approved method of use. Additionally, the USPTO recently issued U.S. Patent Nos. 12,151,024 (the ‘024 patent) and 12,144,890 (the ‘890 patent). The ‘024 and ‘890 patents belong to the ‘574 and ‘495 family of patents, respectively, and are listed in the Orange Book with an expiration date of January 21, 2041. We continue to prosecute patent applications and anticipate that additional patents are forthcoming.

•In January 2025, we announced the receipt of clearance from the FDA to market a new Smart Tip designed to access the medial branch nerves to manage chronic low back pain. This new, 25-gauge 180 mm Smart Tip allows for the treatment of deeper nerves, such as the medial branch nerve, and is specifically designed so that it can relieve chronic low back pain associated with facet mediated pain. This longer-needle Smart Tip is uniquely designed for use through a cannula or introducer, providing the ability for ice ball formation at deeper peripheral nerves. This FDA-cleared innovation offers a compelling alternative to conventional treatments such as RFA, which has substantial limitations. With RFA, patients may not get the effects of pain relief until one-to-two weeks after treatment. Further the intense heat can damage surrounding tissue and blood vessels, and tissue damage may lead to painful neuritis (inflammation in the nerves).

•In January 2025, Laura Brege was appointed Chair of the Board, following the retirement of former Chair, Paul J. Hastings, and Andreas Wicki, PhD. These changes align with our ongoing commitment to board refreshment. With these changes, the board is composed of nine directors, eight of whom are independent and five of whom have joined since October 2023. Each director brings expertise in areas important to our business to support our 5x30 growth-oriented plan including executive leadership, mergers and acquisitions, research and development, operations, commercialization, manufacturing and supply chain.

•In February 2025, we announced a definitive purchase agreement to acquire all outstanding equity interests of GQ Bio not already owned by us for approximately $32 million, net of working capital and other transaction adjustments to equity holders other than us. The net purchase price includes $18 million of cash paid at closing, $8 million to be paid over three years pursuant to a key employee holdback agreement and a post-closing indemnity holdback of $6 million. This acquisition adds a novel locally administered gene therapy vector platform and pipeline of preclinical assets with disease-modifying potential for prevalent musculoskeletal diseases and will advance our 5x30 growth strategy to transition into an innovative biopharmaceutical organization. PCRX-201 is the lead program from this platform. It

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provides financial benefits with the elimination of future development and sales-based milestones including a $4.5 million milestone payment due upon initiation of the Phase 2 clinical trial of PCRX-201 that opened enrollment in February 2025. For more information on the GQ Bio Acquisition, see Note 21, Subsequent Events, to our consolidated financial statements included herein.

Global Economic Conditions, Inflation and Tariffs

Direct and indirect effects of global economic conditions have in the past, 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 or the imposition of tariffs, which could, among other things, result in higher costs for labor, raw materials, equipment and other goods and services; cause our patients to defer or cancel medical procedures, thereby adversely impacting our revenues; and negatively impact our suppliers which could cause longer lead-times or the inability to secure a sufficient supply of materials. The current macroeconomic environment 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.

Results of Operations

Comparison of the Years Ended December 31, 2024 and 2023

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. and (iv) sales of our bupivacaine liposome injectable suspension product for veterinary use. Royalty revenues are related to a collaborative licensing agreement from the sale of our bupivacaine liposome injectable suspension for veterinary use.

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

EXPAREL revenue increased 2% in 2024 versus 2023. A 4% increase in gross vial volume was partially offset by a shift in vial mix. EXPAREL revenue was also impacted by a 1% increase in selling price per unit related to a price increase, net of increases in sales related allowances as a result of group purchasing organization contracting.

ZILRETTA revenue increased 6% in 2024 versus 2023, primarily due to a 4% increase in net selling price per unit and a 2% increase in kit volume. The increase in net selling price per unit is related to two price increases and favorable sales related allowances.

Net product sales of iovera° increased 16% in 2024 versus 2023 primarily due to a 20% increase in Smart Tip volume, partially offset by increased sales related allowances and accruals.

Bupivacaine liposome injectable suspension revenue increased more than 100% in 2024 versus 2023, and the related royalties increased 38%, primarily due to the sales mix of vial sizes and the timing of orders placed for veterinary use.

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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):

Gross margin increased three percentage points in 2024 versus 2023 primarily due to lower EXPAREL product costs as a result of higher production volumes and the absence of a step-up of ZILRETTA fixed assets and inventory to fair value in accordance with purchase accounting that existed in the prior period, partially offset by higher EXPAREL and ZILRETTA inventory reserves.

Research and Development Expense

Research and development expenses primarily consist of costs related to clinical trials and related outside services, product development and other research and development costs, including trials that we are conducting to generate new data for EXPAREL, ZILRETTA and iovera°, clinical trials for PCRX-201 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, research 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 and scientific communication expenses, expenses related to our iGOR registry study 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):

Total research and development expense increased 7% in 2024 versus 2023.

Clinical and preclinical development expense increased 38% in 2024 versus 2023 due to site start-up and ongoing enrollment in a ZILRETTA shoulder trial, an iovera° spasticity trial and an EXPAREL pediatric trial, as well as start-up expenses related to the PCRX-201 Phase 2 trial for knee OA. These increases were partially offset by the winding down of a PCRX-201 Phase 1 trial for knee OA as two-year follow-up visits of subjects were completed in November 2023. This Phase 1 trial remains on track for completion by November 2026, the last year of the follow-up period for the last patient dosed. In addition, toxicology studies for product candidates were completed in 2023.

Product development and manufacturing capacity expansion expense decreased 8% in 2024 versus 2023, primarily attributable to the completion of pre-commercial scale-up activities of our larger-scale EXPAREL manufacturing capacity at

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our Science Center Campus in San Diego, California, which the FDA approved in February 2024 and was subsequently placed into service in July 2024. The decrease was partially offset by ongoing product development costs related to PCRX-201 and development costs for the iovera° medial branch Smart Tip which received FDA clearance in January 2025.

Regulatory and other research and development expenses remained flat in 2024 versus 2023. Increased enrollment and additional sites related to our iGOR registry study were offset by the reduction of international regulatory activities and headcount vacancies.

Stock-based compensation decreased 15% in 2024 versus 2023 primarily due to fewer equity awards granted to research and development personnel and headcount vacancies as well as the acceleration of stock-based compensation awards related to a terminated executive in 2023.

Selling, General and Administrative Expense

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 expense during the years indicated, including percent changes (dollar amounts in thousands):

Total selling, general and administrative expense increased 9% in 2024 versus 2023.

Sales and marketing expense increased 12% in 2024 versus 2023, driven by investments in programs to drive awareness and education for our customers and enhance our marketing, market access and reimbursement teams and value creation for the implementation of separate Medicare reimbursement for EXPAREL at average sales price plus 6 percent in HOPD settings and iovera° at up to an additional $255.85 when providers administer iovera° in ASC and HOPD settings beginning in January 2025 as part of the NOPAIN Act. Investments in these programs continued through the end of 2024 as we launched our national campaign—Make the NOPAIN Pact—which targets hospital pharmacists, administrators, clinicians and revenue management teams and is focused on ensuring these audiences are ready for the commencement of the NOPAIN Act which took effect on January 1, 2025. We also expanded the size of our sales force in the second half of 2024 in order to better extend our reach on each of our commercial products. These increases were partially offset by the impact of a February 2024 restructuring plan designed to ensure we are well positioned for long-term growth (for more information, see Note 17, Contingent Consideration Gains, Restructuring Charges and Other, to our consolidated financial statements included herein).

General and administrative expense increased 5% in 2024 versus 2023 primarily driven by third-party management consulting to assess strategic opportunities and market assessments for our products and compensatory costs associated with the transition to our new Chief Executive Officer effective January 2, 2024, which included compensation related to the current Chief Executive Officer and to the former Chief Executive Officer who remains an advisor to the Company in a consulting capacity.

Stock-based compensation increased 4% in 2024 versus 2023 primarily due to greater equity awards granted to personnel, including the initial stock option and restricted stock unit grants to our new Chief Executive Officer, Frank D. Lee, in January 2024 and our new Chief Financial Officer, Shawn M. Cross, in November 2024.

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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):

As part of the Flexion Acquisition and the MyoScience Acquisition, we acquired intangible assets consisting of developed technology intangible assets and customer relationships, with estimated useful lives between 9 and 14 years. For more information, see Note 8, Goodwill and Intangible Assets, to our consolidated financial statements included herein.

Goodwill Impairment

The following table provides a summary of goodwill impairments during the periods indicated, including percent changes (dollar amounts in thousands):

During the three months ended September 30, 2024, the FDA approved a generic competitor to EXPAREL and a U.S. District Court ruled that one of our patents was not valid (for more information, see Note 19, Commitments and Contingencies, to our consolidated financial statements included herein). Due to these events and a subsequent decrease in our common stock price, it was determined these qualitative factors indicated it was more likely than not that the fair value of goodwill may be less than its carrying value. Accordingly, we performed a quantitative assessment through a discounted cash flow model (or income approach), which resulted in the carrying value of the Company exceeding its fair value by more than the goodwill balance. As a result, the goodwill balance of $163.2 million was recorded as fully impaired during the three months ended September 30, 2024.

Contingent Consideration Gains, Restructuring Charges and Other

The following table provides a summary of the costs (gains) related to contingent consideration, restructuring charges, acquisition-related charges and other activities during the years indicated, including percent changes (dollar amounts in thousands):

In 2024, we recognized contingent consideration gains of $4.5 million due to adjustments reflecting the probability of achieving the remaining Flexion regulatory milestone by December 31, 2030—the milestone expiration date, partially offset by revisions to our weighted average cost of capital and the latest discount rates. In 2023, we recognized contingent consideration gains of $3.4 million due to a decrease in the fair value of the Flexion contingent consideration. The decrease was primarily due to adjustments in the assumption for the long-term forecasts which reduced the probability of meeting the sales-based contingent consideration milestones by December 31, 2030—the expiration date for achieving the milestones. The impact of this assumption on the fair value was partially offset by a decrease to the assumed discount rate based on a significant improvement in our incremental borrowing rate resulting from the TLA Credit Agreement entered into in March 2023. For more information, see Note 11, Financial Instruments, to our consolidated financial statements included herein.

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In 2024 and 2023, we recognized acquisition-related charges of $1.5 million and $2.0 million, respectively, primarily related to vacant and underutilized Flexion leases that were assumed from the Flexion Acquisition.

In 2024, we initiated a restructuring plan designed to ensure that we are well positioned for long-term growth. The restructuring plan included, among other things: (i) reshaping the Company’s executive team; (ii) reallocating efforts and resources from our ex-U.S. and certain early-stage development programs to our commercial portfolio in the U.S. market and (iii) reprioritizing investments to focus on other commercial initiatives. As a result, in 2024, we recognized restructuring charges of $8.5 million related to employee termination benefits, such as the acceleration of share-based compensation, severance, and, to a lesser extent, other employment-related termination costs, as well as contract termination costs. In 2023, we recognized restructuring charges of $1.1 million that included a restructuring plan in an effort to improve our operational efficiencies and recognized one-time employee termination benefits through a reduction of headcount.

For more information, see Note 17, Contingent Consideration Gains, Restructuring Charges and Other, to our consolidated financial statements included herein.

In 2024, we recognized a loss of $2.2 million associated with exiting a lease to a training center located in Houston, Texas. See Note 7, Leases, to our consolidated financial statements included herein.

Other Income (Expense), Net

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

Total other income, net was $10.3 million in 2024 versus total other expense, net of $26.0 million in 2023.

Interest income increased 72% in 2024 versus 2023 due to higher overall investment balances.

The 18% decrease in interest expense was primarily driven by the lower outstanding principal associated with the TLA Term Loan (as defined below) that was entered into in March 2023 which replaced our then-outstanding TLB Term Loan that had a higher principal balance and interest rate, partially offset by issuing the 2029 Notes (as defined below) in May 2024.

In 2024, we recognized a $7.5 million gain on early extinguishment of debt in conjunction with the repurchase of $200.0 million aggregate principal of our 2025 Notes (as defined below). The partial repurchase of the 2025 Notes was completed with our net proceeds from the issuance of the 2029 Notes (as defined below). In 2023, in conjunction with the entry into the TLA Credit Agreement (as defined below), we incurred a $16.9 million loss on early extinguishment of debt recognized as a result of the retirement of $287.5 million aggregate principal of our TLB Term Loan.

For more information, See Note 10, Debt, to our consolidated financial statements herein.

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Income Tax Expense

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

We recorded income tax expense of $36.5 million and $19.7 million for the years ended December 31, 2024 and 2023, respectively. The effective tax rate of (58)% for the year ended December 31, 2024 differed from the U.S. statutory tax rate of 21% primarily due to non-deductible goodwill impairment charges during the three months ended September 30, 2024 and costs related to non-deductible executive compensation and stock-based compensation, mainly related to expired stock options. The effective tax rate of 32% for the year ended December 31, 2023 differed from the U.S. statutory tax rate of 21% primarily due to non-deductible stock-based and executive compensation and non-U.S. valuation allowances, partially offset by 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, 2024, we had an accumulated deficit of $206.4 million, cash and cash equivalents and available-for-sale investments of $484.6 million and working capital of $435.2 million.

We expect that our cash and cash equivalents 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.

Summary of Cash Flows

The following table summarizes our cash flows from operating, investing and financing activities for the years ended December 31, 2024 and 2023 (in thousands):

Operating Activities

In 2024, net cash provided by operating activities was $189.4 million compared to $154.6 million in 2023. The increase of $34.7 million was primarily attributable to increased revenue with favorable gross margins, lower interest paid and the impact of a $13.0 million payment made in the prior year for a termination fee relating to a licensing agreement, partially offset by an increased investment in inventory levels.

Investing Activities

In 2024, net cash used in investing activities was $83.3 million, which reflected $72.6 million of available-for-sale investment purchases (net of sales) and $10.6 million of capital expenditures for manufacturing product fill lines and our EXPAREL capacity expansion project at our Science Center Campus in San Diego, California, partially offset by an increased investment in inventory levels.

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In 2023, net cash provided by investing activities was $77.5 million, which reflected $99.5 million of available-for-sale investment maturities (net of purchases), purchases of fixed assets of $15.2 million for manufacturing product fill lines for our products and equipment for our EXPAREL capacity expansion project at our Science Center Campus in San Diego, California and purchases of debt investments of $6.8 million in external complementary development stage product candidates.

Financing Activities

In 2024, net cash provided by financing activities was $17.4 million, which primarily consisted of $287.5 million in proceeds from the issuance of the 2029 Notes. We used the majority of the proceeds from the 2029 Notes to make a partial repurchase of the 2025 Notes in the amount of $191.0 million, enter into a capped call transaction for $26.7 million, repurchase $25.0 million of treasury stock, and pay debt issuance and financing costs of $9.4 million. Additionally, we made $11.3 million of voluntary prepayments associated with the TLA Term Loan and paid the remaining $8.6 million of 3.375% convertible senior notes due 2024 assumed from the Flexion Acquisition (the “Flexion 2024 Notes”) upon their maturity. See Note 10, Debt, to our condensed consolidated financial statements included herein for further discussion on the Flexion 2024 Notes, 2025 Notes, 2029 Notes, the capped call transaction and the TLA Term Loan. There was also $2.3 million of proceeds from the issuance of common stock through our ESPP.

In 2023, net cash used in financing activities was $183.0 million, which consisted of a $296.9 million repayment of TLB Term Loan principal as well as a $5.8 million prepayment penalty in connection with the retirement of the TLB Term Loan facility and $33.4 million repayments of TLA Term Loan principal, partially offset by the net proceeds from the TLA Term Loan of $149.6 million, $2.8 million from the issuance of common stock through our ESPP and proceeds from the exercise of stock options of $1.9 million.

Equity Financings

From our inception in December 2006 through December 31, 2024, we have raised $344.5 million of net proceeds from the sale of common stock and other equity securities via public offerings.

Stock Repurchase Program

In May 2024, we announced that our board of directors approved a share repurchase program which was effective immediately and authorizes us to repurchase up to an aggregate of $150.0 million of our outstanding common stock. Repurchases under this program may be made at management’s discretion on the open market or through privately negotiated transactions. The share repurchase program may be suspended or discontinued at any time by us and has an expiration date of December 31, 2026.

During the year ended December 31, 2024, concurrently with the pricing of the offering of the 2029 Notes, we entered into separate privately negotiated agreements with certain of the initial purchasers of the 2029 Notes or their respective affiliates and/or certain other financial institutions to repurchase 837,240 shares of our common stock for a total cost of $25.1 million, inclusive of $0.1 million of accrued excise tax. During the year ended December 31, 2023, we did not repurchase any shares of our common stock.

As of December 31, 2024, we had remaining authorization to repurchase approximately $125.0 million of our common stock, subject to restrictions under the TLA Credit Agreement and the Indentures.

Debt

2028 Term Loan A Facility

On March 31, 2023, we entered into a credit agreement (as amended, the “TLA Credit Agreement”) to refinance the indebtedness outstanding under our TLB Credit Agreement. The term loan issued under the TLA Credit Agreement (the “TLA Term Loan”) was issued at a 0.30% discount and provides for a single-advance term loan A facility in the principal amount of $150.0 million, which is secured by substantially all of our and any subsidiary guarantor’s assets and matures on March 31, 2028. We may elect to borrow either (i) alternate base rate borrowings or (ii) term benchmark borrowings or daily simple SOFR (as defined in the TLA Credit Agreement) borrowings. Each term loan borrowing which is an alternate base rate borrowing bears interest at a rate per annum equal to (i) the Alternate Base Rate (as defined in the TLA Credit Agreement), plus (ii) a spread based on our Senior Secured Net Leverage Ratio ranging from 2.00% to 2.75%. Each term loan borrowing which is a term benchmark borrowing or daily simple SOFR borrowing bears interest at a rate per annum equal to (i) the Adjusted Term SOFR Rate or Adjusted Daily Simple SOFR (as each is defined in the TLA Credit Agreement), plus (ii) a spread based on our Senior Secured Net Leverage Ratio ranging from 3.00% to 3.75%. During the year ended December 31, 2024, we made $11.3 million of voluntary principal prepayments. During the year ended December 31, 2023, we made a scheduled principal payment of $2.8 million as well as $30.6 million of voluntary principal prepayments. As of December 31, 2024, borrowings

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under the TLA Term Loan consisted entirely of term benchmark borrowings at a rate of 7.43%. At December 31, 2024, the outstanding principal on the TLA Term Loan was $105.3 million.

The TLA Credit Agreement requires us to, among other things, maintain (i) a Senior Secured Net Leverage Ratio (as defined in the TLA Credit Agreement), determined as of the last day of each fiscal quarter, of no greater than 3.00 to 1.00 and (ii) a Fixed Charge Coverage Ratio (as defined in the TLA Credit Agreement), determined as of the last day of each fiscal quarter, of no less than 1.50 to 1.00. The TLA Credit Agreement requires us to maintain an unrestricted cash and cash equivalents balance of at least $500.0 million less any prepayments of the 2025 Notes at any time from 91 days prior to the maturity date through the earlier of (i) the latest maturity date of the 2025 Notes and (ii) the date on which there is no outstanding principal amount of the 2025 Notes. The TLA Credit Agreement also contains customary affirmative and negative covenants, financial covenants, representations and warranties, events of default and other provisions. As of December 31, 2024, we were in compliance with all financial covenants under the TLA Credit Agreement. See Note 10, Debt, to our consolidated financial statements included herein for further discussion.

2029 Convertible Senior Notes

In May 2024, we completed a private placement of $287.5 million in aggregate principal amount of our 2.125% convertible senior notes due 2029, or 2029 Notes, and entered into an indenture with respect to the 2029 Notes. The 2029 Notes accrue interest at a fixed rate of 2.125% per annum, payable semiannually in arrears on May 15th and November 15th of each year, and mature on May 15, 2029.

In May 2024, we used part of the net proceeds from the issuance of the 2029 Notes to repurchase $200.0 million aggregate principal amount of the 2025 Notes in privately negotiated transactions at a discount for $191.4 million in cash (including accrued interest). The partial repurchase of the 2025 Notes resulted in a $7.5 million gain on early extinguishment of debt.

At December 31, 2024, all $287.5 million of principal was outstanding on the 2029 Notes. See Note 10, Debt, to our consolidated financial statements included herein for further discussion.

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 1st and August 1st of each year, and mature on August 1, 2025. At December 31, 2024, the outstanding principal on the 2025 Notes was $202.5 million. See Note 10, 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 TLA Term Loan, 2025 Notes and 2029 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 cost and timing of the potential milestone payments to former Flexion stockholders, which could be up to an aggregate of $372.3 million if certain regulatory and commercial milestones are met. See Note 11, Financial Instruments, to our consolidated financial statements included herein for more information;

•the impact of global economic conditions—including the impact of inflation and tariffs—on our product, material and labor costs, supply chain, longer lead-times, an inability to secure a sufficient supply of materials, our operating expenses and our business strategy;

•the timing of and extent to which the holders of our 2025 Notes and 2029 Notes elect to convert their 2025 Notes and 2029 Notes, the timing of principal and interest payments on our TLA Term Loan and the timing and impact of increases to the variable interest rate on our TLA Term Loan borrowings in accordance with the terms of the TLA Credit Agreement;

•the costs and our ability to successfully continue to expand the commercialization of EXPAREL, ZILRETTA and iovera°;

•the cost and timing of expanding and maintaining our manufacturing facilities;

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

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•the costs related to legal and regulatory matters, including those to develop and defend our intellectual property;

•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 the approval of EXPAREL;

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

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

•the timing and the number of shares of our common stock repurchased through our share repurchase program; 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 may hinder our access to capital.

Contractual Obligations

We had two convertible senior notes outstanding as of December 31, 2024, for which $202.5 million in aggregate principal amount is due on our 2025 Notes in August 2025 and $287.5 million in aggregate principal amount is due on our 2029 Notes in May 2029. The remaining interest payments on our 2025 Notes is $1.5 million, all of which is due in 2025. The remaining interest payments on our 2029 Notes is $27.3 million, of which $6.1 million is due in 2025. We also have the TLA Term Loan with $105.3 million in outstanding principal. Due to voluntary principal prepayments of $30.6 million made during the year ended December 31, 2023 and $11.3 million made during December 31, 2024, we are not contractually obligated to make principal payments in 2025, although we retain the option to do so. As of December 31, 2024, there are contractually obligated principal payments of $4.1 million in 2026, $15.0 million in 2027 and $86.3 million in 2028. The remaining interest payments of the TLA Term Loan are approximately $25.0 million based on the current interest rate, of which $7.9 million is due in 2025.

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, 2024, we had net minimum commitments of $64.0 million, of which $12.3 million are due in 2025. For more information, refer to Note 7, Leases, to our consolidated financial statements included herein.

In addition, we have approximately $59.9 million of minimum, non-cancelable contractual commitments for contract manufacturing services as of December 31, 2024, of which $20.3 million is due in each of 2025 and 2026, $17.9 million is due in 2027 and the remaining $1.4 million is due in 2028. We have approximately $6.5 million of minimum, non-cancelable contractual commitments for the purchase of certain raw materials as of December 31, 2024, all of which are due in 2025. We had $1.8 million of other minimum, non-cancelable contractual commitments as of December 31, 2024, of which $1.4 million is due in 2025, and the remaining $0.4 million is due thereafter.

As part of the Flexion Acquisition, there are up to $372.3 million in potential payments if all regulatory and commercial milestones are met. For more information, see Note 11, Financial Instruments, to our consolidated financial statements included herein.

In February 2025, we completed the GQ Bio Acquisition. The net purchase price includes approximately $8 million to be paid over three years pursuant to a key employee holdback agreement as well as a post-closing indemnity holdback of approximately $6 million. For more information on the GQ Bio Acquisition, see Note 21, Subsequent Events, to our consolidated financial statements included herein.

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 and goodwill, 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

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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. We include 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, 2024, 2023 and 2022 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 contingent consideration gains, restructuring charges and other. Changes in contingent consideration can result from changes in the assumed achievement and timing of estimated sales 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:

The maximum remaining potential payments related to contingent consideration from the Flexion Acquisition is $372.3 million as of December 31, 2024. 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, 2024 by $6.3 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, 2024 by $0.9 million.

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 subject to impairment testing at least annually or upon the occurrence of a triggering event that could indicate a potential impairment. We have historically tested goodwill for impairment by performing a qualitative assessment in order to determine whether facts and circumstances support a determination that reporting unit fair values are greater than their carrying values. This has historically been performed using readily available market data and company-specific factors.

If we determine that it is more likely than not that the fair value of the Company is less than its carrying value, a quantitative test is required. This is performed by comparing the fair value of the Company with its carrying value. If the

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estimated fair value of the reporting unit is less than the carrying amount of the reporting unit, impairment is indicated, requiring recognition of a goodwill impairment charge up to the carrying value of goodwill. The fair value of the Company would be calculated through an income approach. Under the income approach, we calculate the fair value based on the present value of estimated future cash flows. Considerable management judgment is necessary to evaluate the impact of operating and macroeconomic changes and to estimate the future cash flows used to assume fair value. Our estimates of future cash flows consider past performance, current and anticipated market conditions and internal projections and operating plans which incorporate estimates for sales growth and future margins. Additional assumptions would include estimated discount rates and the probability of success for our product pipeline candidate products. We believe such assumptions would reflect current and anticipated market conditions and are consistent with those that would be used by other marketplace participants for similar valuation purposes. Such assumptions are subject to change due to changing economic and competitive conditions.

In July 2024, the FDA approved a generic competitor to EXPAREL and in August 2024, a U.S. District Court ruled that one of our EXPAREL patents was not valid. We determined that these events, combined with a subsequent decrease in our common stock price, indicated that it was more likely than not that the fair value of goodwill may be less than its carrying value, which required us to perform a quantitative impairment test. This quantitative impairment test resulted in our carrying value exceeding the fair value of the Company by more than the goodwill balance. As a result, the goodwill balance of $163.2 million was fully impaired during the three months ended September 30, 2024. For more information, see Note 8, Goodwill and Intangible Assets, to our consolidated financial statements included herein.

Recent Accounting Pronouncements

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