Earnings call transcript: Pacira Q1 2025 shows revenue miss, stock dips

Pacira Biosciences Inc. (PCRX) reported its Q1 2025 earnings, revealing a revenue shortfall compared to forecasts, which led to a 4.76% drop in its stock price during aftermarket trading. The company reported total sales of $164.9 million, falling short of the expected $175.6 million. According to InvestingPro analysis, Pacira maintains a "GREAT" financial health score of 3.05, suggesting strong fundamentals despite current challenges. The company appears undervalued based on InvestingPro’s Fair Value analysis, with strong gross margins and strategic initiatives partially offsetting concerns about the revenue miss and declining ZILRETTA sales.

Key Takeaways

• Pacira’s Q1 2025 revenue fell short of expectations, totaling $164.9 million.
• The stock price declined by 4.76% in aftermarket trading.
• Strong non-GAAP gross margin of 81% was reported.
• Strategic initiatives include the "No Pain" program and restructuring of the sales force.
• Patent protection for EXPAREL extended until 2039.

Company Performance

Pacira Biosciences reported mixed performance for Q1 2025. While sales of its flagship product, EXPAREL, increased to $136.5 million from $132.4 million in 2024, ZILRETTA sales declined to $23.3 million from $25.8 million. The company has focused on expanding its market penetration with strategic initiatives like the "No Pain" reimbursement program, aiming to target 18 million outpatient surgical procedures.

Financial Highlights

• Revenue: $164.9 million, below the $175.6 million forecast.
• EXPAREL sales: $136.5 million, up from $132.4 million in 2024.
• ZILRETTA sales: $23.3 million, down from $25.8 million in 2024.
• Non-GAAP gross margin: 81%, up from 72% last year.
• Adjusted EBITDA: $44.1 million.

Earnings vs. Forecast

Pacira’s Q1 revenue missed the forecast of $175.6 million, reaching only $164.9 million. The shortfall was primarily due to lower-than-expected sales of ZILRETTA. The absence of EPS data prevents a full analysis of earnings performance.

Market Reaction

Following the earnings announcement, Pacira’s stock fell by 4.76% in aftermarket trading, closing at $23.98. The decline reflects investor concerns over the revenue miss and decreased ZILRETTA sales. However, InvestingPro data shows analyst price targets ranging from $21 to $65, with management demonstrating confidence through aggressive share buybacks. The stock has shown resilience with a 44% gain over the past six months, despite current market pressure.

Outlook & Guidance

Pacira has set a total revenue guidance for 2025 between $725 million and $765 million, with a focus on expanding its market share through new programs and product innovations. The company anticipates a more significant impact from its "No Pain" program in the latter half of the year.

Executive Commentary

CEO Frank Lee emphasized the company’s strategic path, stating, "We started the year by introducing our five by 30 path to value creation." Chief Medical Officer Jonathan Slonan highlighted the potential of PCRX-201, saying it "has the potential to revolutionize the treatment of osteoarthritis."

Risks and Challenges

• Continued revenue shortfalls could impact investor confidence.
• Market penetration remains low, posing growth challenges.
• Potential tariffs and macroeconomic pressures could affect costs.
• Competition, though limited, could increase in key markets.
• Dependence on successful implementation of strategic initiatives.

Q&A

During the earnings call, analysts inquired about Medicare coverage variations and the company’s focus on hospital and ASC market penetration. Executives also discussed potential on-market product acquisitions and the minimal expected impact from potential tariffs.

Full transcript - Pacira Pharmaceuticals Inc (PCRX) Q1 2025:

Conference Operator: Good day, and thank you for standing by. Welcome to the First Quarter twenty twenty five Pacira Biosciences Earnings Conference Call. At this time, all participants are in listen only mode. After the speakers’ presentation, there will be the question and answer session. Speakers’ there the Please be advised that today’s conference is being recorded.

I would now like to hand the conference over to our first speaker today, Susan Mesko, Head of Investor Relations. Please go ahead.

Susan Mesko, Head of Investor Relations, Pacira Biosciences: Thank you, and good afternoon, everyone. Welcome to today’s conference call to discuss our first quarter twenty twenty five financial results. Joining me are Frank Lee, Chief Executive Officer Jonathan Slonan, Chief Medical Officer and Sean Krop, Chief Financial Officer Tony Molloy, Chief Legal and Compliance Officer and Brandon Teehan, Chief Commercial Officer are also here for today’s question and answer session. Before we begin, let me remind you that this call will include forward looking statements subject to the Safe Harbor provisions of federal securities laws. Such statements represent our judgment as of today and may involve risks and uncertainties.

This may cause our actual results, performance or achievements to differ materially. For information concerning risk factors that could affect the company, please refer to our filings with the SEC. These are available from the SEC or the Sicero website. Lastly, as a reminder, we will be discussing non GAAP financial measures on today’s call. Description of these metrics, along with our reconciliation to GAAP, can be found in the news release issued earlier this afternoon.

With that, I will now turn the call over to Frank Lee.

Frank Lee, Chief Executive Officer, Pacira Biosciences: Thank you, Susan, and good afternoon, everyone. I’m pleased to say 2025 is off to a solid start. We started the year by introducing our five by 30 path to value creation to advance our transition into an innovative biopharmaceutical company. To remind you, the plan supports two broad strategic imperatives. First, accelerating growth in our strong commercial based business, and second, advancing an innovative pipeline of potentially transformative assets like PCRX two zero one.

In just a few short months, we’ve achieved early and meaningful five by 30 milestones. With respect to growing our commercial base business, we successfully settled our patent infringement litigation for EXPAREL. This agreement recognizes the strength of our IP and establishes an exclusivity runway extending to 2039. We expanded our EXPAREL patent estate and listed our eighteenth patent in the FDA’s orange book with additional patents forthcoming. And our legal team recently secured a favorable court ruling that eliminates our RDF royalty obligation for EXPAREL.

This will benefit EXPAREL gross margins by low single digit percentage. As for the pipeline, here too, we saw strong progress. First, we added a novel platform, a preclinical portfolio, and a talented research team with the acquisition of GQ Bio. Second, multiple new PCRX tool and datasets are reading out this year. The new data continue to underscore the promise and disease modifying potential of PCRX201 and the HCAD platform.

Finally, patient dosing is officially underway in our phase two ASCEND study of PCRX201 in osteoarthritis of the knee. I’ll start by expanding a bit more on the settlement of EXPAREL litigation. We believe this positive outcome recognizes the strength of our EXPAREL portfolio. It also provides important short and long term visibility to confidently advance our five by 30 plan and fortify our leadership in musculoskeletal pain. Importantly, the agreement is volume limited with no pricing restrictions, royalties, or technology transfer.

Fresenius and its partners are solely responsible for the future manufacture and import of the generic product. As a reminder, this is a sole generic and a filer. Any future filer would have to overcome a significant number of legal hurdles given our growing number of Orange Book listed patents. In short, the agreement sets the stage for long term EXPAREL growth and market expansion for the next fourteen years. And with only one generic and ample room for increased penetration, we expect EXPAREL to generate significant cash flow for the foreseeable future.

This provides a perfect segue to no pain. We have an important opportunity to significantly expand EXPAREL utilization. As you know, no pain provides a reimbursement pathway for eighteen million outpatient surgical procedures. Approximately six million of these are CMS procedures, which are now covered under no pain. The remaining 12,000,000 procedures are covered by commercial plans, where we expect no pain like coverage and policies will be implemented over time.

As a reminder, it will take time for the market to broadly adopt the new reimbursement. That said, we’re seeing encouraging leading indicators in this early phase of the launch. First quarter average daily EXPAREL sales and volumes were up approximately 7% over 2024 after adjusting for two fewer selling days in 2025. This is more than double the low single digit year over year growth rate reported in the last two years. Beyond EXPAREL sales, other positive early indicators include an increase of more than 30% in both new and reactivated EXPAREL accounts with customer expansion across all sites of care, mounting utilization of the new EXPAREL J code indicating a rising level of awareness around enhanced reimbursement policies.

Growth within community hospitals and ambulatory surgical centers. These accounts, which typically have fewer decision makers, are embracing the no pain value proposition. We’re incorporating best practices from these early wins into our discussions with larger health systems. And formulary wins are starting to come in for integrated delivery networks. We expect these wins to grow as the year progresses while we navigate the numerous stakeholders within these large scale networks.

While we’re encouraged by the early positive trends, it’s important to keep in mind that we’re driving change for more than a decade of established processes within complex delivery systems. As you know, claims data can take four more months to process, and we look forward to sharing quarterly updates as more reliable market data become available in the second half of the year. On the payer front, we continue to highlight EXPAREL value proposition to commercial plans with real world evidence. We’re pleased to see an increasing percentage of claims coming in from those plans that have adopted no pain like policies. This too indicates a rising level of awareness among health care providers and organizations about the enhanced reimbursement that’s now available.

Since our last call, additional commercial plans have adopted no pain like coverage, and we anticipate more to follow suit in the months ahead. Now turning to our other products, ZILRETTA and ioverao. As a reminder, late last year, we restructured our field based teams to prioritize EXPAREL and maximize the opportunity of no pain. As part of our plan to establish a commercial, medical, and market access powerhouse, we pivoted our existing sales force to focus on EXPAREL. In parallel, we onboarded new sales teams to focus specifically on ZILRETTA and ioverao, given specific capabilities required to service these customers.

As a result, first quarter sales were impacted by the transition given that both products are promotion sensitive. This should naturally subside with some time as the team strengthens relationships and begins to hit its stride in the second quarter. In addition, our three sales force structure now has the capability and capacity to carry additional products. For ZILBRETA, we’re rolling out several new programs this spring. Among these are establishing value based contracts with large accounts that have demonstrated interest and are capable of driving volume growth, broadening use within Medicare population where we have a very good access and coverage.

There is no prior authorization requirement for CMS patients in contrast to those commercial plans. This allows ZILRETTA treatment to be administered during the same office visit that a provider decides to treat. Driving awareness around Zaretta’s unique delivery mechanism and strong safety and pharmacokinetic profile, this allows for fewer systemic effects such as blood glucose spikes, a key advantage for diabetic patients and their health care providers, and assessing strategic partnerships to expand our breadth and depth of customer coverage. In parallel with our commercial activities, our phase three registrational study is advancing in shoulder LA and on track for top line results next year. If approved, ZILRETTA would be the first and only long acting steroid approved for use in shoulders.

This is a sizable market with approximately 1,000,000 intra articular injections administered each year. Switching gears to ioverao. As you might recall, this year, we’re launching an innovative smart tip specifically designed for use as a medial branch block to relieve low back pain. Millions of Americans suffer from chronic low back pain. It often leads to poor quality of life, disability, lost wages, and persistent prescription opioid use.

We’re pleased with what we’re seeing from the first phase of the launch. Initially, we’re focusing on a small group of spine key opinion leaders to gather insights and feedback before expanding to a broader targeted audience. The medial branch SmartTip stands to grow the number of ioverao procedures in the second half of the year and beyond. Lastly, our registrational study of ioverao for the treatment of spasticity is advancing with top line results expected next year. There’s significant lack of innovation and patient satisfaction in this debilitating condition.

We believe ioverao represents a novel approach for patients with moderate to severe spasticity seeking better treatment options. In addition to our label extension studies for ZILRETTA and ioverao, we’re evaluating other opportunities with near and midterm path to revenue accretion. We’re also evaluating commercial partnerships in certain key markets outside

Jonathan Slonan, Chief Medical Officer, Pacira Biosciences: of

Frank Lee, Chief Executive Officer, Pacira Biosciences: The US where we believe our products can deliver value. Turning now to our clinical pipeline where we’re focusing on becoming a therapeutic area leader in musculoskeletal pain and adjacencies. These are large markets significantly lacking innovation. Nearly one in four Americans are living with chronic pain and are actively seeking new interventions that address its underlying cause. As we look at new product development, we’re prioritizing mid to late stage derisked opportunities.

More specifically, product candidates with validated mechanisms and established reimbursement pathways. CCARX two zero one is a great example that we believe has the potential to revolutionize the treatment of osteoarthritis. Before I turn the call over to Jonathan for a review of our PCR201 program, I’d like to highlight our recently announced stock repurchase program and continued focus on disciplined capital allocation. This $300,000,000 authorization doubles the amount authorized under the previous stock repurchase program. This decision underscores our commitment to delivering shareholder value and the confidence we have in our growth outlook.

We believe to say our shares offer an attractive opportunity at the current valuation, particularly in light of the settlement of EXPAREL patent litigation. This settlement agreement solidified the strong cash flow generating profile of our business with the certainty of an exclusivity runway to 2039. We believe this will drive significant growth and value as we advance five by 30. With that, I’d like to turn the call over to Jonathan to provide additional details on p c r x two zero one and our recently acquired HCAD platform. Jonathan?

Jonathan Slonan, Chief Medical Officer, Pacira Biosciences: Thank you, Frank, and good afternoon to all joining us today. I’m excited to share a few highlights on the progress made with PCRX201, which we believe has the potential to be an important disease modifying therapy for osteoarthritis. TCRX two zero one targets the I one pathway, which triggers inflammation in response to pathogens and cellular stress. Importantly, this is a well validated e risk target. There are two FDA approved drugs targeting the IL-one pathway that are effectively used to treat other inflammatory conditions.

These drugs are not practical for osteoarthritis as they would require very high doses per daily injections directly into the joints. IL-one RA is a core regulator of this pathway and helps to keep inflammation in balance by turning it off when it’s not needed. As we get older, our bodies have a more challenging time maintaining that balance. As a result, we develop chronic I l one driven inflammation that eventually causes joint damage and pain. The PCRX two zero one, we are rebalancing the inflammatory scales by mimicking the body’s natural response to inflammation at the cellular level.

This targets the root cause of osteoarthritis rather than just alleviating symptoms. We remain highly encouraged by the data from our large seventy two patient study in OA of the knee. We continue to follow these patients and have multiple new datasets reading out this year. Last month, we presented encouraging data at the Osteoarthritis Research Society International Meeting. In this subgroup analysis, a single injection demonstrated two years of improvement in pain, stiffness, and function.

Importantly, clinically meaningful efficacy was observed across all structural severity subgroups. This included the most severe with a KL grade of four. Most osteoarthritis studies do not include KL grade four patients as this advanced stage is particularly challenging to treat. Next week, the team will be presenting at the annual meeting of the American Society of Gene and Cell Therapy. Our presence will include a podium presentation where we will be sharing immunogenicity data.

These data will provide important insights into the potential for redosing. As you know, this would be a key feature given that many OA patients have multiple joints impacted. We will also be hosting a clinical symposium to highlight the advantages of our high capacity adenovirus or HCAD platform. In June, we will be at the annual meeting of the European Alliance of Associations for Rheumatology. Here, we will be presenting the three year follow-up data from our phase one study.

As you know, we are advancing our phase two ASCEND study in NEO A, and patient dosing is underway. We expect to report top line data from part a of the study late next year. This study is generating a high level of interest from investigators, which underscores the significant unmet need and lack of innovation in osteoarthritis. To fully describe the ASCEND study design, we have made an educational webinar available in the investors section of our website. We invite you to watch and learn more about our development program for this exciting asset.

As you know, p c r s two zero one is the lead program for our recently acquired HCAG gene therapy vector platform. This platform solves many of the challenges that have made gene therapy inaccessible for common diseases. The HCAG vector is much more efficient at delivering genes into cells compared to many other gene therapies that rely on adenovirus associated virus or AAV vectors. As a result, the desired effect can be achieved with much smaller doses. The vector used in the HCAD platform can carry up to 30,000 base pairs of DNA.

This enable gene therapy with multiple or larger genes compared to AAV vectors. It is locally delivered and sustained. This differs from systemic approaches requiring much higher dosing to achieve the desired effect. Lower doses covered with efficient manufacturing support a favorable and commercially viable cost of goods profile, another key advantage over other gene therapies. In addition to this novel local delivery platform, this transaction brings us key research talent and a promising preclinical portfolio.

The team is carefully looking at these opportunities, which may have disease modifying potential and other prevalent musculoskeletal diseases. We also have identified numerous well validated cytokines that would be strong candidates for the HCAD platform. For those areas outside of our strategic focus, we see potential for partnering. This could extend the HCAD platform into other conditions of high unmet need for localized treatment with a therapeutic protein as warranted. Bottom line, the HCAD platform directly aligns with our five by 30 objectives of having five novel development programs and five partnerships by 02/1930.

It offers great potential to position us as a leading developer of novel treatments for the underlying cause of chronic pain. It also presents the opportunity for Pizzira to be a strategic partner of choice and drive value through future royalty revenue. We look forward to sharing more details on the advancement of PCRX two zero one and other HCAD based product development opportunities on future calls. With that, I will turn the call over to Sean for a review of the financials.

Sean Krop, Chief Financial Officer, Pacira Biosciences: Thank you, Jonathan. I’ll start with an update on sales and margin trends. First quarter EXPAREL sales increased to $136,500,000 versus $132,400,000 in 2024, driven by volume growth. On an average daily basis, EXPAREL sales and volumes were both up by approximately 7% after adjusting for two fewer selling days in 2025 versus 2024. First quarter ZILRETTA sales declined to 23,300,000.0 versus 25,800,000.0 reported in 2024.

As Frank mentioned, this was largely attributable to transition to our new sales forces for ZILRETTA and ioverao. Looking ahead, we believe the foundation is set for a return to growth in the remainder of the year. For ioverao, sales were slightly up at $5,100,000 compared to $5,000,000 in the first quarter of twenty twenty four. Turning to gross margins. On a consolidated basis, our first quarter non GAAP gross margin improved to 81% versus 72% last year.

Gross margins continue to benefit from the improved costs and efficiencies of our enhanced larger scale manufacturing process that went live last year at San Diego. As Frank noted, we had a recent win in the Nevada court that will benefit future EXPAREL growth gross margins by a low single digit percentage by eliminating RDF royalties. For non GAAP R and D expense, the first quarter increased $23,100,000 from $16,400,000 reported last year. This increase relates to start up activities for the phase two study of PCRX201, expenses associated with ZILRETTA shoulder study and product development. Non GAAP SG and A expense came in at $76,200,000 for the first quarter.

This is up from $63,800,000 last year. This increase is largely due to the investments in our commercial medical and market access organization, targeted marketing initiatives, and the expansion of our field force. All of this resulted in another quarter of significant adjusted EBITDA of $44,100,000 for the first quarter. As for the balance sheet, we continue to be in a position of strength with $494,000,000 in cash and investments. The business that is producing significant operating cash flow, we believe we are well equipped to advance our five by 30 growth strategy to create shareholder value.

We’re taking a disciplined disciplined approach to capital allocation where we’re focusing on three areas. First, accelerating growth in our best in class based business. Second, advancing an innovative pipeline and becoming the leader in musculoskeletal pain and adjacencies. And third, opportunistically returning capital to shareholders. As Frank highlighted earlier, the board recently authorized a new share repurchase program of 300,000,000.

Given what we believe to be a significant disconnect in our current market valuation, this buyback authorization will run through the end of twenty twenty six. Going forward, we will continue to be highly strategic, balancing favorable operating margins while executing our five by 30 growth strategy. We expect to prioritize opportunities that benefit operating margins to further enhance value for shareholders. This includes carefully investing in a best practice commercial, medical, and market access powerhouse and targeted marketing initiatives. In parallel, we will work to advance a pipeline of potentially transformative assets of PCRx-two zero one as we transition into an innovative biopharmaceutical organization.

That brings us to our full year P and L guidance for 2025, which today we are reiterating as follows: Total revenue of $725,000,000 to $765,000,000 As Frank mentioned, we are pleased with the positive early signs and growing level of awareness around no pain. That said, it will take time for broad adoption, and we expect more meaningful uptick to begin in the second half of the year. Non GAAP gross margin of 76% to 78%, non GAAP r and d expense of 90,000,000 to $105,000,000 non GAAP SG and A expense of $290,000,000 to $320,000,000 stock based compensation of $56,000,000 to $61,000,000 Lastly, for those modeling adjusted EBITDA, we expect our full year 2025 depreciation expense to be approximately 30,000,000 Lastly and not surprisingly, we’ve recently been asked several questions about the impact of potential tariffs. As a reminder, all of our intellectual properties domicile in The US. The majority of our manufacturing takes place in The US, and we have the capacity to to allocate more export manufacturing to The US.

Based upon everything proposed today, we do not expect material impact on our operations. Recognizing this is an evolving situation, we’re closely monitoring developments and committed to minimizing any potential impact on the business. And with that, I’ll turn the call back to Frank.

Frank Lee, Chief Executive Officer, Pacira Biosciences: Thanks, Sean. In closing, I wanna emphasize the transformative journey our company has been undergoing. With our five by 30 strategy, we have a clear path for future growth and value creation. Well, on our way to becoming a pioneering biopharmaceutical company and a leader in the musculoskeletal pain and adjacencies. Our best in class commercial based business is generating significant cash flow and is poised for accelerated top line growth.

This is anchored by EXPAREL, which is well positioned to continue to set new standards in patient care in the near and long term. VCRX-two zero one, our novel, locally administered gene therapy product candidate for common diseases like osteoarthritis. This exciting asset continues to demonstrate its potential to revolutionize the treatment of osteoarthritis. Our phase two development program is enrolling and on track for the first data readout next year. And our proprietary first of its kind, HCAB platform, has the potential to unlock gene therapies for common diseases affecting millions of patients.

Thank you again for joining us today and for your continued support and trust in our mission to deliver innovative non opioid therapies to transform the lives of patients. With that, operator, we’re ready to open the call for questions.

Conference Moderator: And now we’re going to take our first question.

Conference Operator: And it comes from the line of Gregory Renza from RBC Capital Markets. Your line is open. Please ask your question.

Anish, Analyst, RBC Capital Markets: Hi, Frank and team. It’s Anish on for Greg. Thanks for the updates this quarter and for taking our questions. Just a couple from us. First, if you could just provide some color on what proportion of patients on average are covered with Medicare and would no pain be applicable for within each surgical segment?

Are there any coverage trends within that you’re taking notice of? And second, on 02/2001, what are you hearing from docs and patients with respect to what needs to be shown to encourage wide adoption should a therapy such as it enter the market? Thanks so much.

Frank Lee, Chief Executive Officer, Pacira Biosciences: Thanks, Nishan. It’s Frank Lee here. Thanks for the question. So your question was about the proportion of patients covered by Medicare. And let me turn it over here to Bren, our chief commercial officer, and he can speak to that.

Brandon Teehan, Chief Commercial Officer, Pacira Biosciences: Sure. Thanks for the question. As you would suspect, there is a little bit of a difference between inpatient and outpatient. We have more commercial coverage in the inpatient sec segment, a little over 50%. But in the outpatient, hospital outpatient setting in ASC, it skews a little bit more towards the Medicare side on the HOCD side.

And then for ASC, it’s principally commercial. Almost, two third three quarters of our business would be found, commercially covered in ASCs.

Frank Lee, Chief Executive Officer, Pacira Biosciences: The second question was around 02/2001 and what we’re hearing from clinicians on what we need to show for wide adoption. At a high level, what I’d say here is that based on our market research and speaking with the community, current standard of care provides roughly three to six months of benefit. And to the extent that we can provide a year or more, that’s considered transformative and game changing. And so that’s why we’re particularly enthusiastic about the two year data we’ve been able to share so far. And, as Jonathan mentioned, we’ll be sharing our three year data, later on this year.

Anish, Analyst, RBC Capital Markets: Great. Thank you so much.

Conference Moderator: Thank you. Now we’re going to take our next question. And the question comes from the

Conference Operator: line of Gary Nachman from Raymond James. Your line is open. Please ask your question.

Gary Nachman, Analyst, Raymond James: Alright. Thanks, and and good afternoon. So first regarding no pain, you’ve talked about some of the logistical challenges with hospital systems benefiting from no pain. What are you doing to help expedite that from your end, the review programs that you have in place, and are you working with any third parties to to help you get hospitals online faster? And then just talk a bit more about how overall education of no pain is going for physicians and hospitals in general, and where awareness is now, versus, let’s say, the start of the year.

And then I have a follow-up.

Frank Lee, Chief Executive Officer, Pacira Biosciences: Thanks for the question, Gary. And just at a high level, before I turn it over to Bren here, at a high level, we’ve said very, very consistently that it’s going to be more the second half of the year until we really see traction for all the reasons we described. We are seeing some good early indicators. And certainly, the things that we see in the smaller institutions and other settings, we can apply to these bigger institutions. But let me turn it over to Brent to talk here a little bit more.

Yeah. Thanks for the question.

Brandon Teehan, Chief Commercial Officer, Pacira Biosciences: And I think Frank did really address where we’ve seen our early progress, which I think we’ve translated into a path forward for larger IDNs. I think things are going largely as we expected. So in the community hospital setting, in the ambulatory surgery centers, we’re seeing significant growth in adoption. And the reason we’re seeing that is there are fewer decision makers, easier to, communicate the no pain message as well as the separate J code. But concurrently, we’re also seeing formulary wins at IDNs where they’re, expanding lines of use for EXPAREL as a function of these conversations.

Now, obviously, a lot of that’s taken place over the last ninety to one hundred days. I think the momentum you’d expect to see in IDNs would come as has been suggested in the latter, part of the year as it works its way through the system.

Frank Lee, Chief Executive Officer, Pacira Biosciences: So let me just add to that, Gary, that as I mentioned in my comments, we have prioritized our resources to EXPAREL field force and other field facing resources as well as in house, resources. And so and this is how we’re ensuring that we have focus on this. And, again, as more reliable market data become available as we progress during the course of the year, we’ll be able to share with you some data that we can trend over time consistently. So, but bottom line, as Bryn said, is we’re, I think, right on track with where we expected to be, and, we expect that we’ll continue to see the ramp, with respect to no pay.

Gary Nachman, Analyst, Raymond James: Okay. Great. And then just on the recent settlement agreement with Fresenius now that you have line of sight, of no generic EXPAREL through the end of the decade, just discuss your priorities a bit more, in terms of allocating capital. So how much will you be spending on the commercial efforts to accelerate EXPAREL versus spending on the pipeline and also looking to expand the pipeline through in licensing deals? And, you know, would you consider doing a larger transaction for on market products, and would you only focus on the paint space or potentially look at some adjacencies?

Thank you.

Frank Lee, Chief Executive Officer, Pacira Biosciences: Yeah. Yeah. Thanks for the question, Gary. And before I turn it over to to Sean here to talk about capital allocation, let me just say at a at a high level, we’re very pleased with the settlement. This is a volume limited settlement, provides visibility out to 2,039.

That’s number one. And as you know, even in the first year, it’s high single digits and it gradually goes up from that. And last few years, it’s steady at high 30s is what we’ve stated publicly, right? So that combined with the fact that right now, as we’ve defined our market, our penetration is still relatively low. In fact, the high single digits if you aggregate it.

So we have plenty of room to grow, and we’ve got visibility now out to 2,039. So that says context. Now let me turn it over to Sean for our capital allocation priorities.

Sean Krop, Chief Financial Officer, Pacira Biosciences: Yeah. Thanks for the question. So similar to the last time we all got together, we’re just to reiterate, regularly review the capital allocation strategy. And as Frank mentioned, there’s some key areas of focus, investing in the base business to capitalize on no pain with the goal of accelerating top line growth as we’ve articulated in the five by 30, advancing very thoughtfully an innovative pipeline, focus on musculoskeletal pain and adjacencies. And then as we we announced earlier, returning capital to shareholders.

Board authorized an increase in the the share buyback, which is now at 300,000,000, and it runs through the end of twenty twenty six. With regard to that particular decision, the it was part of our capital allocation, continued evaluation. We performed extensive analyses to that end to get to that 300 number and also believe based upon this positive settlement that there is a significant disconnect in the current valuation of the company.

Frank Lee, Chief Executive Officer, Pacira Biosciences: Thanks, Sean. Let me just bring it back to maybe adding additional color on a couple of other elements here. First is, as I mentioned, overall, we’re low in terms of penetration as we define our TAM. And just to be really very specific, I mean, we’ve got, I think, a lot of room to further penetrate in lower extremity GI, OBGYN, OMFS, plastics, and much of which is outpatient, if you take a look at the latter few. So we’re optimistic about the potential we have to further penetrate these markets and grow as we get beyond 2,030.

So that said, I think that in terms of the kind of capital allocation, you see how we progress in a very disciplined way to focus on our growth. And the GQ Bio acquisition that we completed this quarter, I think, is a great sign of how we’re being very, very disciplined with the kind of capital that we deploy.

Gary Nachman, Analyst, Raymond James: Okay. But it it sounds like you would consider on market products. It sounds like you have some capacity within the Salesforce to potentially do that.

Frank Lee, Chief Executive Officer, Pacira Biosciences: Yeah. Great point, Gary. As I made in my comments, you know, this restructuring of sorts that we did prioritize EXPAREL, but it also what it did was provide capacity now for the three sales forces to not only carry our products, but perhaps additional products that we bring into the bag, new products. So I would say that that’s a possibility. We’ll be very, I think, disciplined in the way we look for these kinds of opportunities.

And given the current market environment, I think we’re in a very strong position financially to look for those kind of opportunities and find a deal in a very disciplined way. Okay, great. Thank you.

Conference Moderator: Thank you. Now we’re going to take our next question. And the question comes from the

Conference Operator: line of Les Solevsky from Twist Securities. Your line is open. Please ask your question.

Jonathan Slonan, Chief Medical Officer, Pacira Biosciences: Hi, this is Jeevan on for Les. Thanks for taking our questions. Just a quick one for me. Are there any EXPAREL enhancements in your line of sight that could extend its life cycle or perhaps expand its label?

Frank Lee, Chief Executive Officer, Pacira Biosciences: Yeah, thanks for the question, Steven. What I’d say at high level is we continue to innovate EXPAREL, and as you can see from the recent patents that we’ve Orange Book listed, the eighteenth one, and we expect to continue that innovation going forward. So so that’s number one. Number two, as it relates to other, I would say, indications, we don’t have plans for that. We currently do have some studies ongoing, but we don’t have any new plans for additional indications for EXPLORER.

Thank you.

Conference Moderator: Thank you. Now we’re going to take our next question. And the question comes from

Conference Operator: the line of Hardik Parikh from JPMorgan. Your line is open. Please ask your question.

Hardik Parikh, Analyst, JPMorgan: Hey, thank you very much for taking the question. I just had a question about the gross margins and I apologize if I missed it in the middle. You mentioned about how the royalty to RDF is going to get eliminated and that was about low single digits. That should help improve the gross margins. So just wondering how incorporated into the full year guide in terms of you reiterating it.

Thank you.

Frank Lee, Chief Executive Officer, Pacira Biosciences: Thanks for the question, Hardy. As you might know, this litigation goes has a long history. Our legal team did a great job here of getting to a favorable resolution. And as as you mentioned, this is low single digit impact for EXPAREL. This isn’t for overall for EXPAREL.

And so we’re very pleased about this. And going forward now, this will help us improve margins for sure. But I wanna come back to we think that overall margins will improve as we sell more product. So as we drive volumes, margins will continue to improve. So that said, Sean, you can speak to a little bit of the impact this quarter versus going forward.

Sean Krop, Chief Financial Officer, Pacira Biosciences: Yeah. We were very pleased to see the strong first quarter margins that exceeded our guided range of 76 to 78%. We’re getting good volume output from both our EXPAREL sites, San Diego and The UK. As as we just discussed, they the March benefited from favorable RDF royalty ruling. But just as a reminder, the there’s a number of manufacturing variables that can result in a pretty significant quarter variability.

But based upon the performance of this quarter and what we’re seeing from the teams that we’ll, of course, look at margins again after our second quarter landing and determine if an update is needed for a full guidance full year guidance range at that point.

Frank Lee, Chief Executive Officer, Pacira Biosciences: And I guess just to add, this quarter, it’s a minor impact to this quarter. It’s really more going forward that we’ll have a more significant impact than carryover.

Sean Krop, Chief Financial Officer, Pacira Biosciences: So RDF was incorporated the cohort?

Frank Lee, Chief Executive Officer, Pacira Biosciences: Yeah, I think that was your question, wasn’t it, Hardy?

Hardik Parikh, Analyst, JPMorgan: Yeah, yeah, correct. Basically, why not raise the guide? Yep, yep. Okay. And then the second question is just more around

Frank Lee, Chief Executive Officer, Pacira Biosciences: Just one other thing about that, just for the guide. The other thing is obviously there are a number of headlines about tariffs these days. And so of course been diligent at looking at that, analyzing that. And so we’re comfortable with the guidance that we provided. So we’re not lowering guidance.

We’re comfortable with the guidance that’s provided. And then as we get better visibility on truly how these tariffs might, if and how they might manifest, then we can sharpen guidance as needed.

Hardik Parikh, Analyst, JPMorgan: All right, great. Thank you. And then the second question is just around pricing. So if I understand your comments correctly, I’m interpreting as pricing was mostly flat, maybe slightly down when you adjust for those lower number of selling days. So one, is that correct?

And then how do you see pricing progressing for the rest of the year as GPO contracts come online?

Frank Lee, Chief Executive Officer, Pacira Biosciences: Yeah. So let me turn this over to Sean. We’ve pursued price as we normally do. And, obviously, GPO contracts are slowly coming online. So, Sean?

Sean Krop, Chief Financial Officer, Pacira Biosciences: Sure. Yeah. The with regard to EXPAREL, the the it was gross file volume growth for the for the period. Yeah. That was so it was it was it was all volume effectively.

And then with regard to the GPOs, we’ve again talked about this previously that there will be, a mid single digit impact for the first year when we bring on board, knock on wood, the next final GPO final GPO agreement. We’ll be lapping the second one this coming fall, and that’s how to think about a good single digit impact.

Frank Lee, Chief Executive Officer, Pacira Biosciences: Thank you.

Conference Moderator: Thank you. Now we will take our next question. And the question comes from

Conference Operator: the line of Serge Belanger from Needham. Your line is open. Please ask your question.

Sean Krop, Chief Financial Officer, Pacira Biosciences: Good afternoon. Thanks for taking my questions, and apologies if you’ve already covered this earlier in the call. Just regarding surgery volumes, can you just give us a little color on what you’re seeing so far first quarter and, I guess, the first month of the second quarter and if the macros impacted those volumes? And secondly, regarding competition, I think you mentioned that you’re you’re still at low penetration on your overall TAM. But just curious if you’re seeing more competition now from other players like Zynrelief.

That’s it. Thank you.

Frank Lee, Chief Executive Officer, Pacira Biosciences: Well, thanks for the question. Let me take a little bit of the competition question and then turn the surgery volume to Brad. Right now, we don’t see any new competition that’s significant. So we have a lot of room to grow. There’s largely the bupivacaine, short acting bupivacaine, and the various cocktails that are out there, pumps, etcetera.

But all that said, we really think the room we have a lot of room for penetration going forward. So that’s what I’ll say to that. Nothing has changed with respect to the competition and intensity.

Sean Krop, Chief Financial Officer, Pacira Biosciences: Brent?

Brandon Teehan, Chief Commercial Officer, Pacira Biosciences: Yeah, thanks for the question. In the first quarter, we saw nominally a decline in surgical surgery room hours, low single.

Frank Lee, Chief Executive Officer, Pacira Biosciences: Thanks, Serge. Anything more?

Sean Krop, Chief Financial Officer, Pacira Biosciences: No. That was it. Thank you. K.

Conference Moderator: Thank you.

Conference Operator: Dear speakers, there are no further questions for today. I would now like to hand the conference over to Susan Mesko for any closing remarks.

Susan Mesko, Head of Investor Relations, Pacira Biosciences: Thank you, operator, and thanks to all on the call for your questions and time today. We are excited about the opportunities that lie ahead for us. Throughout the remainder of the year, we will continue to ensure we are well positioned for long term success by executing our five by 30 plan to advance our mission. Thank you, and be well.

Conference Operator: That does conclude our conference for for today. Thank you for participating. You may now all disconnect. Have a

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