Pacira BioSciences, Inc. Common Stock 2026 Q2 Earnings Call

Good afternoon, everyone. Welcome to today's conference call to discuss our second quarter 2026 financial results. Joining me are Frank Lee, Chief Executive Officer, Brendan Teehan, Chief Commercial Officer, and Shawn Cross, Chief Financial Officer. Kristen Williams, Chief Administrative Officer and Secretary, Anthony Molloy, Chief Legal Officer, and Jonathan Slonin, Chief Medical 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 or the Pacira website. Lastly, as a reminder, we will be discussing non-GAAP financial measures on today's call.

A description of these metrics, along with our reconciliation to GAAP, can be found in the news release issued this afternoon. With that, I will now turn the call over to Frank Lee.

Thank you, Susan, and good afternoon to everyone joining today's call. On behalf of the remarkable team here at Pacira, I'm pleased to share our continued progress in executing our 5 by 30 strategy and transitioning into a more innovation-driven biopharmaceutical company. Our second quarter performance reflects disciplined execution of our 5 by 30 strategy, translating into commercial momentum, strong cash generation, pipeline advancement, and high-caliber partnerships. Furthermore, our 5 by 30 progress was clearly recognized with a decisive shareholder vote for both our strategy and director nominees at our annual meeting in June. Notable second quarter accomplishments include revenues of more than $109 million, even as macroeconomic pressures weighed on certain elective procedures in the hospital setting. Adjusted EBITDA of nearly $50 million. Establishing a scalable, commercially viable U.S.-based manufacturing process for PCRX-201, a testament to our team's clinical development and manufacturing capabilities.

Opening enrollment in Part B of our phase II ASCEND study for PCRX-201. Completing enrollment in iovera° registrational study in spasticity, completing the iovera° divestiture on July 31 and forming a partnership in spasticity with Zimmer Biomet. I would like to thank the Pacira and Zimmer Biomet teams for working so collaboratively and efficiently over the past 30 days to close this transaction. I look forward to continued partnership with our Zimmer Biomet colleagues going forward. I will begin with a high-level overview of EXPAREL, and then Brent will cover additional commercial details shortly. EXPAREL continues to increase penetration share across all segments, despite softness in certain deferrable soft tissue procedures, which historically wax and wane with macroeconomic conditions. This is particularly notable in inpatient settings, where separate reimbursement outside the bundle is not available.

Looking ahead, we believe we are well positioned to continue to outperform the elective surgery market by advancing three key priorities. First, expanding patient access by broadening commercial payer coverage. We recently secured a major win with UnitedHealthcare, now providing separate reimbursement for EXPAREL outside of the surgical bundle. This milestone brings our total covered lives to 150 million at mid-year and well within reach of our full-year goal of 160 million covered lives. Separately, on ZILRETTA, Brent has some great news to share about ZILRETTA coverage on UnitedHealthcare. Second, generating disseminating compelling health economic data to strengthen the EXPAREL value proposition. Here we are also seeing strong momentum, with many commercial plans reimbursing significantly higher than CMS. Third, increasing penetration in existing and new accounts while driving expansion within macroeconomic resilient procedures and outpatient sites of care.

Turning to lifecycle management, we remain on track to report top-line results for our phase III study of ZILRETTA in shoulder OA later this year. If approved, ZILRETTA would become the first drug with an FDA-approved indication specifically for shoulder OA. We also recently completed enrollment in our registrational iovera° spasticity study and remain on track to report top-line results before year-end. As a reminder, we will collaborate with Zimmer Biomet on advancing the spasticity program. The transaction structure provides us with the opportunity to receive additional compensation, assuming clinical and regulatory success. Beyond our commercial products, our pipeline is entering what we believe will be a catalyst-rich period. We expect top-line data from PCRX-201 later this year and continue to advance PCRX-2002 with phase II development scheduled to begin later this year.

PCRX-2002 is a novel hydrogel formulation of ropivacaine designed to provide both rapid onset and long-acting analgesia from a single, simple instillation into the surgical field. If successful, we believe it has potential to complement EXPAREL and further strengthen our leadership position in post-surgical pain management. Let me spend a moment on PCRX-201, which we believe has the potential to represent a paradigm shift in the treatment of knee OA. Our scalable commercial manufacturing process is now up and running, and enrollment in Part B of our phase II study is underway. As a reminder, top-line results for Part A are expected later this year. Part A randomized 49 patients to one of three treatment groups, PCRX-201 Dose A, PCRX-201 Dose B, or saline control. All patients received an intra-articular corticosteroid before treatment, allowing the durability of PCRX-201 to be evaluated against the standard of care.

The primary objective is safety, with secondary efficacy endpoints evaluated at weeks 38 and 52. We recently received some exciting news for our PCRX-201 program with the acceptance of a phase I manuscript for the publication in the "Annals of the Rheumatic Diseases," the leading journal in rheumatology. The paper highlights encouraging results from the 72-patient phase I study over 104 weeks. We're also advancing HCAd-based preclinical candidates in degenerative disc disease, dry eye disease, and canine OA. We recently completed a pilot safety study in canine OA, and our pilot efficacy study is now initiating. Finally, the last item I'd like to cover is the important progress we've made executing new partnerships, an important pillar of our strategy. I'll begin with the recently completed divestiture of iovera° to Zimmer Biomet. For Pacira, the transaction sharpens our focus as an innovation-driven biopharmaceutical company while improving our margin profile.

It allows us to redirect capital and resources toward higher return growth opportunities aligned with our long-term strategic priorities. We're also excited about this transaction means for patients. Zimmer is uniquely positioned to maximize iovera°'s global potential for patients through its scale, orthopedic leadership, and strong presence in total knee. On the financial front, Pacira will receive up to $140 million, with $70 million up front and an additional $70 million linked to revenue-based milestones. The structure preserves our participation in iovera°'s future success in both existing indications and spasticity. We're also pleased to share important progress with LG Chem's recent regulatory filing for EXPAREL in South Korea. This places revenues on track to beginning 2027. As we move forward in the second half of the year, we plan to provide visibility into additional commercial partnerships outside of the U.S.

Importantly, we expect ex-U.S. revenues to extend through the life of our patents, which provide exclusivity into the 2040s. Taken together, these transactions show how the partnership pillar of 5 by 30 strategy can extend our reach, improve capital efficiency, and allow us to concentrate resources on our highest priority growth opportunities. Our experience has shown that partnerships with top-tier organizations can generate value beyond the initial agreement by mutually leveraging our scale, expertise, customer relationships, and unlocking commercial value for our partnered assets. These partnerships create pathways for potential future collaborations across our portfolios. Pacira exits the second quarter with strong execution of our 5 by 30 strategy with commercial momentum, a broader market access position, meaningful upcoming pipeline catalysts, and a growing roster of top-tier partners.

With that, I'd like to turn the call over to Bryn to share more details on our second quarter commercial performance.

Bryn. Thank you, Frank, and good afternoon to all joining us today.

During the second quarter, EXPAREL gained penetration and share across both orthopedic and soft tissue market segments, even as the broader elective surgery market slowed in certain areas. The impact varied by procedure category. While orthopedic procedures were relatively stable, elective soft tissue procedures experienced a slowdown, with more pronounced declines in the hospital inpatient setting. As a reminder, EXPAREL volumes are approximately 60% orthopedic and 40% soft tissue. This dynamic was likely driven by factors including softer consumer healthcare spending and broader economic uncertainty impacting near-term elective soft tissue procedures. EXPAREL's continued penetration and share gains this quarter reinforce our confidence that the brand can deliver durable growth as access expands, procedures migrate to outpatient settings, and customers continue to prioritize opioid-sparing care.