On November 3, 2021 Pacira BioSciences, Inc. (Nasdaq: PCRX), the industry leader in its commitment to non-opioid pain management and regenerative health solutions, reported financial results for the third quarter of 2021 (Press release, Pacira Pharmaceuticals, NOV 3, 2021, View Source;991.htm [SID1234594354]).

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Third Quarter 2021 Financial Highlights

Total revenues of $127.7 million
GAAP net income of $17.7 million, or $0.40 per share (basic) and $0.39 per share (diluted)
Adjusted EBITDA (non-GAAP) of $48.1 million
"Throughout the third quarter we made significant progress advancing our corporate growth strategy. We delivered solid topline growth and EXPAREL continues to significantly outpace the recovery of the elective surgery market, which is facing ongoing pandemic-related challenges. This underscores the growing adoption of EXPAREL in outpatient settings, non-elective procedures and beyond. October saw a positive shift in market dynamics, and we expect the fourth quarter to return to more robust year-over-year topline growth," said David Stack, chairman and chief executive officer of Pacira. "Looking ahead, we are on track to achieve our 5-year objective for top-line annual growth in at least the high teens with operating margins greater than 50 percent. Our proposed acquisition of Flexion Therapeutics is expected to further diversify and grow our topline while providing meaningful synergies that deliver substantial accretion to our cash flows and earnings beginning in 2022. Importantly, this proposed acquisition strengthens our leadership position in opioid-sparing pain management."

The company provides weekly EXPAREL utilization and elective surgery data within its investor presentation, which is accessible at investor.pacira.com.

Third Quarter 2021 Financial Results

Total revenues were $127.7 million in the third quarter of 2021, versus the $117.5 million reported for the third quarter of 2020.
EXPAREL net product sales were $121.9 million in the third quarter of 2021, versus the $113.7 million reported for the third quarter of 2020. The number of EXPAREL selling days were 64 in the third quarter of 2021, versus 65 in the third quarter of 2020.
Third quarter 2021 iovera° net product sales were $4.2 million, versus the $2.7 million reported for the third quarter of 2020.
Sales of bupivacaine liposome injectable suspension to a third-party licensee for use in veterinary practice were $0.7 million in the third quarter of 2021, versus the $0.4 million reported for the third quarter of 2020.
Third quarter 2021 royalty and collaborative licensing and milestone revenues were $0.9 million, versus the $0.6 million reported for the third quarter of 2020.
Total operating expenses were $96.3 million in the third quarter of 2021, versus the $99.9 million reported for the third quarter of 2020.
Research and development (R&D) expenses were $11.6 million in the third quarter of 2021, compared to $14.7 million in the third quarter of 2020. R&D expenses included $4.7 million and $5.6 million of product development and manufacturing capacity expansion costs in the third quarters of 2021 and 2020, respectively.
Selling, general and administrative (SG&A) expenses were $48.8 million in the third quarter of 2021, compared to $52.6 million in the third quarter of 2020.
GAAP net income was $17.7 million, or $0.40 per share (basic) and $0.39 per share (diluted), in the third quarter of 2021, compared to GAAP net income of $130.1 million, or $3.03 per share (basic) and $2.94 per share (diluted), in the third quarter of 2020. Included in GAAP net income in the third quarter of 2020 was a $124.6 million income tax benefit related to the release of a valuation allowance on deferred tax assets.
Non-GAAP net income was $32.5 million, or $0.73 per share (basic) and $0.72 per share (diluted), in the third quarter of 2021, compared to non-GAAP net income of $29.9 million, or $0.70 per share (basic) and $0.68 per share (diluted), in the third quarter of 2020.
Adjusted EBITDA (non-GAAP) was $48.1 million in the third quarter of 2021, compared to $34.2 million in the third quarter of 2020.
Pacira ended the third quarter of 2021 with cash, cash equivalents and short-term available-for-sale investments ("cash") of $693.9 million. Cash provided by operations was $60.3 million in the third quarter of 2021, compared to $39.8 million in the third quarter of 2020.
Pacira had 44.5 million basic and 45.5 million diluted weighted average shares of common stock outstanding in the third quarter of 2021.
See "Non-GAAP Financial Information" below.

Recent Business Highlights

Acquisition of Flexion Therapeutics further expanding leadership position in non-opioid pain management. On October 11, 2021, Pacira and Flexion Therapeutics, Inc. announced a definitive agreement for Pacira to acquire Flexion for $8.50 per share in cash, plus one non-tradeable contingent value right (CVR) worth up to $8.00 per share in cash. The CVR is payable (subject to certain terms and conditions) in the event certain sales and/or regulatory milestones are achieved.

New EXPAREL Patents. In October 2021, Pacira received two Notices of Allowance from the United States Patent and Trademark Office. One patent claims chemical composition of EXPAREL and the other claims a novel manufacturing process. After issuance, Pacira will submit the composition patent for listing in the FDA Approved Drug Products with Therapeutic Equivalence Evaluations (the Orange Book). The patents will have an expiration date of January 22, 2041.

Commercial production underway with enhanced EXPAREL manufacturing process at Swindon facility. In September 2021, Pacira announced that it had successfully completed process validation and EXPAREL commercial production is underway at its custom 200-liter manufacturing suite in Swindon, England.

Publication of Phase 3 study of EXPAREL infiltration in pediatric patients undergoing spinal or cardiac surgeries. In September 2021, Pacira announced that full results of its Phase 3 PLAY study of EXPAREL administered via infiltration in pediatric patients undergoing spinal or cardiac surgeries have been published in Journal of Clinical Anesthesia. The study, which was designed to establish the safety and pharmacokinetics (PK) of EXPAREL in a pediatric population, found the PK profile was comparable across age groups and generally consistent with the profile in adult patients.
Financial Guidance

The company’s net product sales were negatively impacted by the COVID-19 pandemic in 2020 due to the significant postponement or suspension in the scheduling of elective surgical procedures resulting from public health guidance and government directives. Elective surgery restrictions began to lift on a state-by-state basis in April 2020, allowing EXPAREL sales to return to year-over-year growth in June 2020. However, while many restrictions have since eased and COVID-19 vaccines become more widely available and administered to the general public, it is still unclear how long it will take the elective surgery market to normalize, or if restrictions on elective procedures will recur due to COVID-19 variant strains or otherwise. In order to provide greater transparency, the company is reporting monthly intra-quarter unaudited net product sales until it has gained enough visibility around the impacts of COVID-19. The company reports the number of selling days for EXPAREL to normalize for differences in reporting period growth rates. The company also provides weekly EXPAREL utilization and elective surgery data within its investor presentation, which is accessible at investor.pacira.com.

Today’s Conference Call and Webcast Reminder

The Pacira management team will host a conference call to discuss the company’s financial results and recent developments today, Wednesday, November 3, 2021, at 8:30 a.m. ET. To participate in the conference call, dial 1-877-845-0779 and provide the passcode 5562638. International callers may dial 1-720-545-0035 and use the same passcode. In addition, a live audio of the conference call will be available as a webcast. Interested parties can access the event through the "Events" page on the Pacira website at investor.pacira.com.

For those unable to participate in the live call, a replay will be available at 1-855-859-2056 (domestic) or 1-404-537-3406 (international) using the passcode 5562638. The replay of the call will be available for one week from the date of the live call. The webcast will be available on the Pacira website for approximately two weeks following the call.

Non-GAAP Financial Information

This press release contains financial measures that do not comply with U.S. generally accepted accounting principles (GAAP), such as non-GAAP net income, non-GAAP net income per common share, non-GAAP cost of goods sold, non-GAAP research and development (R&D) expense, non-GAAP selling, general and administrative (SG&A) expense and adjusted EBITDA, because these non-GAAP financial measures exclude the impact of items that management believes affect comparability or underlying business trends.

These measures supplement the company’s financial results prepared in accordance with GAAP. Pacira management uses these measures to better analyze its financial results, estimate its future cost of goods sold, R&D expense and SG&A expense outlook for 2021 and to help make managerial decisions. In management’s opinion, these non-GAAP measures are useful to investors and other users of our financial statements by providing greater transparency into the operating performance of Pacira and its future outlook. Such measures should not be deemed to be an alternative to GAAP requirements or a measure of liquidity for Pacira. Non-GAAP measures are also unlikely to be comparable with non-GAAP disclosures released by other companies. See the tables below for a reconciliation of GAAP to non-GAAP measures.