Pacira(PCRX) - 2023 Q4 - Annual Report

Revenue Performance - EXPAREL net product sales remained flat at $538.12 million in 2023 compared to$536.90 million in 2022, with a 4% increase in gross vial volume offset by a 3% decrease in net selling price per unit [446]. - ZILRETTA revenue increased by 5% to $111.10 million in 2023, driven by a 3$19.69 million in 2023, primarily due to a 33% increase in Smart Tip volume [447]. - Total revenues for 2023 were $674.98 million, a 1$666.82 million in 2022 [446]. Gross Margin and Expenses - Gross margin improved to 73% in 2023, up from 70% in 2022, mainly due to lower inventory reserves and reduced royalty expenses [449]. - Total research and development expenses decreased by 10% to $76.26 million in 2023, representing 11$24.47 million in 2023, attributed to the completion of certain trials [454]. - Product development and manufacturing capacity expansion expenses increased by 35% to $33.37 million, driven by new product development costs and scale-up activities for EXPAREL [455]. - Total selling, general and administrative expenses rose by 6$269.4 million, which is 40% of total revenue [458]. - Sales and marketing expenses increased by 6% in 2023 to $153.0 million, driven by marketing investments and educational initiatives [459]. - General and administrative expenses increased by 12$82.7 million, primarily due to legal fees from ongoing litigation [461]. Cash Flow and Financing - Net cash provided by operating activities was $154.6 million in 2023, an increase of$9.4 million from 2022 [479]. - Net cash provided by investing activities was $77.5 million in 2023, reflecting$99.5 million from available-for-sale investment maturities [480]. - Net cash used in financing activities was $183.0 million in 2023, including a$296.9 million repayment of TLB Term Loan principal [482]. - The company had an accumulated deficit of $106.8 million and cash and cash equivalents of$281.0 million as of December 31, 2023 [476]. Debt and Interest - Interest expense decreased by 49% in 2023 to $20.3 million, attributed to the TLA Term Loan entered in March 2023 [470]. - As of December 31, 2023, the outstanding principal on the TLA Term Loan was$116.6 million, with a borrowing rate of 8.46% [485]. - The company made a scheduled principal payment of $2.8 million and$30.6 million in voluntary principal prepayments during the year ended December 31, 2023, resulting in no required principal payments for 2024 [485]. - The company incurred a $16.9 million loss on early extinguishment of debt after repaying the$287.5 million principal on the TLB Term Loan [488]. - The TLA Term Loan has a principal amount of $150.0 million, with an outstanding principal of$116.6 million as of December 31, 2023, and an interest rate of 8.46% [508]. Tax and Equity - The effective tax rate for 2023 was 32%, significantly higher than the U.S. statutory tax rate of 21% due to non-deductible expenses [474]. - The company has raised $344.5 million in net proceeds from the sale of common stock and other equity securities since its inception in December 2006 [484]. Regulatory and Management Changes - The FDA approved the sNDA for a 200-liter EXPAREL manufacturing suite in February 2024, expected to enhance gross margins over time [445]. - The company appointed Frank D. Lee as CEO in December 2023, bringing over three decades of experience in the biotech and pharmaceutical industry [444]. - Regulatory and other research and development expenses increased by 22$372.3 million related to the Flexion Acquisition, contingent on achieving certain regulatory and commercial milestones [494]. - As of December 31, 2023, the outstanding principal on the 2025 Convertible Senior Notes was $402.5 million, maturing on August 1, 2025 [489]. - The company had net minimum commitments of$78.6 million for operating leases as of December 31, 2023, with $13.0 million due in 2024 [496]. - The company is required to maintain a Senior Secured Net Leverage Ratio of no greater than 3.00 to 1.00 and a Fixed Charge Coverage Ratio of no less than 1.50 to 1.00 under the TLA Credit Agreement [486]. - Accounts receivable are primarily concentrated with three large wholesalers, posing a risk of material adverse impact on financial condition if there is non-performance or non-payment [510].