Good day, and thank you for standing by. Welcome to the Q4 2025 Pacira BioSciences, Inc. Earnings Conference Call. At this time, participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Susan Mesco, Head of Investor Relations. Please go ahead.

Thank you. Good afternoon, everyone. Welcome to today's conference call to discuss our fourth quarter and full year 2025 financial results. Joining me are Frank Lee, Chief Executive Officer; Brendan P. Teehan, Chief Commercial Officer; and Shawn M. Cross, Chief Financial Officer. 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 that 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 BioSciences, Inc. 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 earlier this afternoon. With that, I will now turn the call over to Frank Lee.

Thank you, Susan. And good afternoon, everyone joining today's call. I am pleased to share Pacira BioSciences, Inc.'s fourth quarter and full year 2025 results and to reflect on what was truly a transformative year for our company. At Pacira BioSciences, Inc., our mission remains unwavering: to deliver innovative, non-opioid pain management therapies that transform lives. Everything we do starts with the patient. We are guided by the science, supported by our people, and grounded in a commitment to improve recovery while reducing exposure to opioids. When I look back at where we stood a year ago, the contrast is striking. Entering 2025, Pacira BioSciences, Inc. faced uncertainty with questions around EXPAREL's long-term exclusivity, inconsistent margins, and limited pipeline visibility. Today, we are a very different company. We have a clear strategic direction, reinvigorated top-line growth, a solidified exclusivity runway, and a significantly expanded patent protection. In addition, we are advancing a promising pipeline that is now entering a data-rich phase. Most importantly, we are a company once again growing with momentum. Our exceptionally dedicated team has helped more than 2,500,000 patients. Last year, we achieved $726,000,000 in revenue and delivered the highest gross margins in our history. This progress is a direct result of our five-by-30 strategy, which we introduced last year to guide our next chapter of growth. Today, one year later, I am proud of where we stand. In our aim to help 3,000,000 patients annually by 2030, we are already at 2,500,000 and climbing. Volume trends in 2025 showed we are moving towards our goal of double-digit top-line growth. We are clearly on track for a five-percentage-point improvement in margins over 2024 through enhanced manufacturing efficiencies. We are advancing our goal of five new pipeline programs. This is demonstrated by our progress with PCRX-201, PCRX-2002, and…

Thank you, Frank, and good afternoon to all joining us today. I am very pleased to review the increased commercial momentum achieved in 2025, which reflects both disciplined execution and a clear strategic vision. I will focus today on our flagship product, EXPAREL. Expanding patient and provider access to our best-in-class long-acting analgesic was our top priority in 2025. As you know, Pacira BioSciences, Inc. has been the driving force behind a multiyear initiative to get the NO PAIN legislation across the finish line. This underscores our leadership in the space and our patient-focused mission. We are now just past the one-year mark for the rollout of NO PAIN, and progress that has yielded is exceeding our expectations. In a recent survey of nearly 750 physicians and pharmacy leaders, 82% view NO PAIN as important for advancing non-opioid stewardship. 92% believe NO PAIN is already contributing to reduced opioid prescribing, and nearly half report changes taking place across protocols, formularies, and prescribing patterns. This research aligns directly with the original intent of NO PAIN, which was to reduce unnecessary opioid exposure around surgery by providing appropriate reimbursement for proven alternatives. We continue to validate these findings with claims data; the early signals are quite encouraging. The momentum is real. NO PAIN provided the initial catalyst to begin knocking down the financial barriers that have historically prevented best-practice pain management. For decades, bundled reimbursement incentivized the use of cheaper generic approaches that often incorporate opioids. Increasingly, this is no longer the case. With NO PAIN, we secured separate reimbursement plus 6% for Medicare patients in outpatient settings. This was a great starting point. Getting commercial plans to follow suit with access-creating reimbursement has helped accelerate change in the market. Here, we have exceeded our internal goal and ended 2025 with 102,000,000…

Thank you, Brendan. I will start with an update on sales and margin trends. Fourth quarter EXPAREL sales increased to $155,800,000 versus $147,700,000 in 2024. Volume growth of approximately 7% was partially offset by a shift in buy mix and discounting from our third GPO going live, with each having a roughly equal impact. As we move forward in 2026, we expect the delta between volume and revenue growth in the first half of the year to be similar to 2025 and then narrow after we anniversary our third GPO agreement midyear. Fourth quarter ZILRETTA sales were $33,000,000, essentially flat versus 2024. For ioverao, fourth quarter sales grew to $7,000,000 versus $6,500,000 in 2024. Turning to gross margins, on a consolidated basis, our fourth quarter non-GAAP gross margin improved to 80% versus 79% last year. 2025 gross margins benefited from better-than-expected yields from both of our enhanced, larger scale 200-liter EXPAREL facilities. These higher production volumes resulted in lower per-unit costs. This performance benefited cost of goods sold but also placed us ahead of our six-month inventory target. As a result, we have adjusted production volumes accordingly and anticipate exiting this year at our targeted inventory and steady-state production. Going forward, through our continuous improvement initiatives, we expect a steady increase in annual gross margins over time. This places us on track for achieving our five-by-30 objective for a five-percentage-point improvement by 2030 over the 76% non-GAAP gross margins reported in 2024. For non-GAAP R&D expense, the fourth quarter increased to $34,400,000 from $22,000,000 reported last year. This increase relates to the $5,000,000 upfront payment to AmacaThera for the in-licensing of PCRX-2002, our advancing Phase II development program for PCRX-201, as well as expenses associated with the ZILRETTA and ioverao registrational studies. Non-GAAP SG&A expense came in at $91,900,000 for…

Thank you, Shawn. I am incredibly proud of our team and energized by the opportunities ahead. While we made great progress in 2025, I am even more excited about 2026. As I have said before, this is a year of Pacira BioSciences, Inc.—a year in which we bring bold ideas, energy, and commitment to transforming what is possible in non-opioid pain management. With that, we are ready to open up the call for questions.

Star 11 on your telephone and wait for your name to be announced. Our first question comes from Dennis Ding with Jefferies. Your line is open.

Hi. This is Andrea on for Dennis. Thanks for taking our questions. I had a quick one around the OA readout. In terms of trends in efficacy that you are talking about, what exactly do you think constitutes a clinically meaningful signal there, provided that we are not expecting a stat sig. Thank you.

Thanks for the question, Cindy. With regard to, I believe you mentioned PCR-201 Part A trial that will read out at the end of the year. And just to remind folks, we enrolled 49 patients in that trial and we expect to report the results near year-end. And so with that said, I am going to turn it over to Jonathan Slonin, our Chief Medical Officer, to take you through the endpoints that we are actually going to be reporting out on. And then I will provide some additional context. So, Jonathan?

Thank you, Frank. So, like most Phase II studies, ASCEND is not powered for efficacy. So the primary focus of this study is safety, but we are actually also looking at important efficacy trends measured by key secondary endpoints. And so we are going to take a look at endpoints related to pain, stiffness, and function. Examples are NRS pain scores. We are going to look at WOMAC for pain and stiffness, and functional indicators using KOOS and ADLs. So we will be looking at that data. Remember, it is a two-part study. The first part of 45 patients that you referred to are already enrolled, and we will have top-line data at the end of the year around safety and trends for our endpoints.

And so let me just add on—thank you, Jonathan—that just to remind folks this one has an active comparator. So we do have a short-acting steroid on board. And certainly, we have some context in terms of how short-acting steroids respond in various studies in addition to having some data from our IGOR registry that we talked about earlier. So we will be able to look at some of those trends. But again, I want to reiterate what Jonathan said. This is primarily a safety study. It is not powered for efficacy, but we intend to look at the endpoints that Jonathan just articulated.

Got it. And just a quick follow-up. Do you expect certain—do you have an internal bar of the numerical separation on some of these endpoints, or it is just really looking for separation? Yes. Thanks for that.

I think, again, I think this is just primarily more for safety and trends. And so we have at least some, I would say, context from our Phase I study that I believe you are familiar with. And we have some context from our IGOR registry and other studies that are reported out on short-acting steroids. So again, the trial is not powered for efficacy, but we can put the data in sort of that context.

Okay. Got it. Thank you.

Thank you. Our next question comes from Douglas Tsao with H.C. Wainwright. Your line is open.

Hi, good afternoon. Thanks for taking the questions. Just first, just curious if we can hear some perspective in terms of the guidance, in particular, on EXPAREL—what are the factors that could lead you to sort of come in at the higher end of the range as well as maybe some of the potential sort of factors that could sort of bring you to the lower end of the range? And then I have a follow-up on the 201 study. Thank you.

Sure. I will provide a little bit of highlights here and then turn it over to Brendan. First off, I am really proud of what the team is able to accomplish this past year in really standing up a commercial, medical, market access powerhouse. And you can see how that has paid off for us in terms of the growth that we demonstrated in volume in the second half of the year versus first half, as well as the number of lives now that we have covered outside of the bundle. And so, I am encouraged by where we are. I see a steady cadence of growth going forward. And so let me turn it to Brendan for some additional commentary.

Yeah. Thanks for the question, and well aligned with the response. I think we are performing very well. We have positioned ourselves for that steady growth, and this is a great starting point in terms of guidance. I think it also provides us with a little bit of opportunity for upside or downside developments from a market perspective. I think Shawn made some comments about, you know, first quarter and some interesting storm dynamics, which always have some implications to a product that is driven by procedures taking place, particularly elective procedures. But other than that, I think our investments are showing promise and are paying off, and I think our leading indicators reinforce that confidence. Doug, your second question?

Yeah. And then just on 201, you know, we will obviously get that initial data and, you know, it is not, as you said, sort of powered for efficacy. I am just curious, is there anything you could learn just in combination with the Phase I data that looks so compelling, and obviously the duration looks so promising as well, that could sort of lead you to sort of maybe accelerate the program in any way, you know, into sort of a registrational phase? Thank you.

Yeah. Thanks for that. So let me step back here a little bit for context. You know, certainly, this platform is a very exciting platform, the HKF platform. And as we all know, this is a locally administered gene therapy. So this could be the first gene therapy for the masses, as we talk about, as opposed to gene therapy that is systemic for rare disease. So we are excited about this program. We are encouraged by the Phase I results. From a Phase II perspective, what we are excited about is, as Jonathan mentioned, we had planned for 45 patients, but we actually enrolled 49. And we did that ahead of schedule. And so that is a good sign. And as we think about as we progress through the course of the year, as I mentioned, we will report these data towards the end of the year. And I want to come back to safety as our primary objective, with looking at trends given what we know about how short-acting steroids respond from various data sets, including our IGOR dataset, and certainly we have our longer-acting ZILRETTA as context as well. And, again, as context, difficult to compare across studies, but the Phase I study, as you mentioned, was compelling with 72 patients that we have now followed up with at three years. And so given all of that, we will take all that into stock and report out at the end of the year. And just to remind, Phase II Part B is scheduled to start enrolling mid this year with commercially viable product. And so this is important. And our target is to enroll about 90 patients there. And those data, along with the Part A data, will certainly inform how we proceed in terms of accelerated fashion, base case fashion, etcetera, for the remainder of the development program. So what I am encouraged about is, as you know, we have RMAT designation, which provides us the opportunity to regularly communicate with the FDA, and I would say so far, the discussions have been constructive.

Great. Thank you so much.

Thank you. Our next question comes from Leszek Sulewski with Truist Securities. Your line is open.

Good evening. Thank you for taking my questions. Frank, perhaps taking in the five-by-30 plan into consideration, could you help us bridge the double-digit revenue growth target versus the just introduced mid-single-digit growth for 2026? And then specifically for EXPAREL, do you frame the 6% growth for this year as conservative, or does it reflect specific headwinds you are already seeing in 4Q or 1Q? I have a follow-up.

Sure. And let me address the second question first. As Brendan mentioned, we are confident about what we have done here in 2025 as a good indicator of what we are going to do in 2026. And you know what? It is a good starting point. And it is, I think, a good place to start, given what we believe is a relatively soft market in terms of elective procedures. So it gives us an opportunity and room for any upside or downside as the year progresses in the elective procedure market. So I want to really reiterate that. Secondly, as we think about now five-by-30, as I articulated earlier on, we are making very good progress towards five-by-30. And I would think about what we have done in second half of last year, what we have committed to this year, and as we move forward, I would expect that we will continue to drive broader access in terms of covered lives outside of the bundle. I would expect that we would extend our reach for both EXPAREL and ZILRETTA further through partnerships, as we have talked about, and in addition, starting in 2027, we will have contribution from ex-U.S. sales of EXPAREL. And so, as I articulated, we signed with a very strong partner in Asia Pacific, LG Chem, and we intend to sign additional partnerships outside of the U.S. where it makes sense. And those contributions will also help the top-line growth. So I would say I would summarize it that way in terms of not only the core growth, but through partnerships here in the U.S. as well as ex-U.S., which allows us to extend our reach in a very efficient way.

Thank you. As a follow-up, you have reached 100,000,000 lives now and noted the implementation of reimbursement takes some time. But it does appear that sentiment around EXPAREL is high on the positive side. So from the feedback you are getting, is the barrier more on the adoption, the clinical adoption, rather than reimbursement that you are seeing? Thank you.

So let me provide a little bit of context, and I will turn it over to Brendan here. I have to tell you, I am really proud of the team in terms of what we have been able to do. We have reported 102,000,000 lives covered outside of the bundle. This is an important distinction now—covered outside of the bundle—because it is a much higher number if you just say covered. So this is outside the bundle. And what we are seeing is really encouraging signs that this momentum will continue and that our customers are able to code and get reimbursed in ways that make a lot of sense for the patient and to the institution. So, Brendan, let me turn it over to you.

For sure. Thanks. Very good question. Very proud that we have gotten, by the end of the fourth quarter, to 102,000,000. That number has already climbed to about 110,000,000 within 2026, and we have no intention of stopping and looking to get as many lives covered outside the surgical bundle. What really changed in 2025 was really the addition of those commercial lives that started to gain attention of more of those economic stakeholders, especially in the second half of the year, and something we intend to capitalize on in 2026. So I would say it is a function of time on the one hand, and then getting the attention of economic stakeholders, particularly thinking about the difference in cost recovery for EXPAREL outside the surgical bundle, which will be a key priority moving forward.

Yeah. Thank you, Brendan. I will just add on top of that. You know, I think historically, and this is the spirit of the NO PAIN Act, my sense is that folks—there was not a lot of debate about which products are good for the patient. But the financial barriers were real, both in terms of product acquisition as well as remittance reimbursement. So on the product acquisition side, as we mentioned, we have now signed GPO contracts; the last of them will lap mid this year. So that provides performance-driven incentives there to acquire the product. And then on the remittance side, reimbursement, we are really pleased to see that, you know, of course, Medicare provides ASP plus 6% in terms of reimbursement. But if we take a look at what the commercial setting provides, it is often much higher than that. So clinicians are able to choose the right product, and now it makes financial sense for their institutions as well.

Thank you. Our next question comes from Serge Belanger with Needham and Company. Your line is open.

Hi. This is John on for Serge today. Thanks for taking our question. Just one for us today. I wanted to touch on ZILRETTA and the J&J MedTech partnership. You know, just curious what you think, you know, if any headwinds were that led to the relatively flat performance in '25 and what you may be looking for in '26 that could provide some confidence in establishing a growth profile now that the J&J team is fully active.

Yeah. Thanks for the question, John. Let me provide a little bit of context and then turn it over to Brendan about what we expect going forward. As you will know, back in 2025, as part of our prioritization and really building a commercial, medical, market access powerhouse, we said we are going to prioritize EXPAREL. So that is what we did. And we focused on EXPAREL, and we restructured the sales forces accordingly to stand up a separate sales force for ZILRETTA and a separate sales force for ioverao. So that caused some disruption, and that was impacting sales. So that is some of the context behind this. And certainly for Johnson & Johnson now, we spent last year training the team and getting them up to speed. And so let me turn it over to Brendan to talk about how we think about 2026.

Yeah. Thank you, Frank, and great question. I would describe the latter half of 2025 as a time where both of our organizations were kind of forming our plans on the local level for the teams. And please remember that while they expand our footprint, they also have—J&J has—as many as five or six counterparts that would cross paths with Pacira BioSciences, Inc. So just making sure that we were well coordinated in our messaging was important. We now have, entering 2026, clear growth objectives for our partner for the year, and they have added that to their incentive compensation plan, which is super critical. We also have appropriate target selection where J&J will take the primary lead on the accounts where they have existing relationships. And they now have, for the first time ever—and I think a very important time in their company's life cycle—a clinically strong complement to the viscosupplements in ZILRETTA and a solution where they often have not had one. That, coupled with what ZILRETTA offers in terms of consistent reimbursement versus what has been relatively variable, I would say, on the viscosupplement side, provides a very strong complementary asset that we are optimistic in 2026. Once we gain a little traction, we will start to show the fruits of that partnership.

Thank you. Our next question comes from Hardik K. Parikh with J.P. Morgan. Your line is open.

Hey, thank you for the time today. I was just wondering, I know in 4Q you guys said you had some unexpected business development cost. As you guys try to grow and diversify the business, can we think of that as maybe happening more often, having some of these kind of one-off business development types of deals? Just want to see how active you guys think you will be going forward. Thank you.

Yeah. Thanks for the question, Hardik. And as Shawn articulated, those were due to not only business development but for some litigation as well. And so just to step back a little bit, as Shawn mentioned, you know, our priority is to really think about how we maximize overall shareholder value. And part of that is how do we invest in the business for our core. And as you can see from the guidance, that is largely done as we think about what we do for commercial, medical, market access, and that is going to be relatively flat, as Shawn mentioned. And now, slowly, we are investing in R&D. And at some point, it makes sense to think about, as Shawn mentioned, accretive deals that could be products that could be dropped into the bag today that would be accretive, that we could provide synergies, and it would make a lot of sense. So I think that is an important priority for us, and we will do that in a very disciplined way, as well as to think about what are those de-risked clinical assets that are in later stages of development that we have expertise and we could carry further. So how we think about it—because it is important to think about how we replenish our portfolio and to drive sales. And what I am really pleased about is, if you think about our pipeline now versus just a year ago, it is quite changed. So now as we think about that 2030 and beyond horizon, we have the following. We have ex-U.S. sales of our products. We have the AmacaThera 143, now called PCRX-2002, in that time frame. We also have PCRX-201, you know, in that round of the 2030 type of time frame. And so, as we look at how do we continue to build our business, we will drive against that five-by-30 objective of putting more things in the pipeline but also ensuring that we grow double digits. Thank you.

Thank you. I am showing no further questions at this time. I would now like to turn it back to Susan Mesco for closing remarks.

Thank you, Danny, and thanks to all on the call for your questions and time today. We are excited about the opportunities ahead and remain focused on executing our five-by-30 growth strategy with discipline and purpose. As we move through 2026, we are confident in our ability to build on our momentum and position Pacira BioSciences, Inc. for long-term success. Thank you again for your continued support, and be well.

This concludes today's conference call. Thank you for participating. You may now disconnect.