0001396814-20-000045 | 10-Q | XBRL Viewer

DEBT (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of composition of the Company's debt and financing obligations

The total debt composition of the 2025 Notes is as follows (in thousands):


	September 30,		December 31,
	2020		2019
0.750% convertible senior notes due 2025	$	402,500	$	—
Deferred financing costs	(9,373)		—
Discount on debt	(84,346)		—
Total debt, net of debt discount and deferred financing costs	$	308,781	$	—

The total debt composition of the 2022 Notes is as follows (in thousands):


	September 30,		December 31,
	2020		2019
2.375% convertible senior notes due 2022	$	160,000	$	345,000
Deferred financing costs	(1,299)		(4,143)
Discount on debt	(11,018)		(34,812)
Total debt, net of debt discount and deferred financing costs	$	147,683	$	306,045

Schedule of total interest expense recognized related to the Notes

The following table sets forth the total interest expense recognized in the periods presented (dollar amounts in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Contractual interest expense	$	1,764		$	2,048		$	5,861		$	6,146
Amortization of debt issuance costs	629			429			1,512			1,273
Amortization of debt discount	5,430			3,467			12,684			10,216
Capitalized interest and other (Note 6)	(691)			(4)			(1,448)			(4)
Total	$	7,132		$	5,940		$	18,609		$	17,631

Effective interest rate on convertible senior notes	6.78		%	7.81		%	7.35		%	7.81		%

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Current assets:
Cash and cash equivalents	$ 125,244	$ 78,228
Short-term investments	406,881	213,722
Accounts receivable, net	46,143	47,530
Inventories, net	68,542	58,296
Prepaid expenses and other current assets	11,710	10,781
Total current assets	658,520	408,557
Long-term investments	44,062	64,798
Fixed assets, net	125,527	104,681
Right-of-use assets, net	76,047	38,124
Goodwill	99,547	99,547
Intangible assets, net	98,487	104,387
Deferred tax assets	104,122	0
Equity investment and other assets	13,957	10,971
Total assets	1,220,269	831,065
Current liabilities:
Accounts payable	13,008	12,799
Accrued expenses	60,403	70,427
Lease liabilities	7,455	4,935
Contingent consideration	5,406	18,179
Income taxes payable	0	1,333
Total current liabilities	86,272	107,673
Convertible senior notes	456,464	306,045
Lease liabilities	72,448	40,938
Contingent consideration	16,176	19,963
Other liabilities	4,219	1,502
Total liabilities	635,579	476,121
Commitments and contingencies (Note 16)
Stockholders’ equity:
Preferred stock, par value $0.001; 5,000,000 shares authorized; none issued and outstanding at September 30, 2020 and December 31, 2019	0	0
Common stock, par value $0.001; 250,000,000 shares authorized; 43,312,638 shares issued and outstanding at September 30, 2020; 41,908,148 shares issued and outstanding at December 31, 2019	43	42
Additional paid-in capital	852,190	753,978
Accumulated deficit	(268,390)	(399,398)
Accumulated other comprehensive income	847	322
Total stockholders’ equity	584,690	354,944
Total liabilities and stockholders’ equity	$ 1,220,269	$ 831,065

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Statement of Comprehensive Income [Abstract]
Net income (loss)	$ 130,119	$ (6,087)	$ 131,008	$ (6,128)
Other comprehensive income (loss):
Net unrealized gain (loss) on investments	(643)	(53)	525	727
Total other comprehensive income (loss)	(643)	(53)	525	727
Comprehensive income (loss)	$ 129,476	$ (6,140)	$ 131,533	$ (5,401)

- Definition

The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

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+ Details

LEASES - Summary of operating lease cost and other operating lease information (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Operating lease costs:
Fixed lease costs	$ 3,099	$ 1,585	$ 7,085	$ 4,544
Variable lease costs	611	403	1,661	1,233
Total	$ 3,710	$ 1,988	8,746	5,777
Cash Flow, Operating Activities, Lessee [Abstract]
Cash paid for lease ROU assets and liabilities			11,251	5,247
ROU assets recorded in exchange for lease obligations			$ 42,101	$ 38,419
Weighted average remaining lease term	9 years 4 months 20 days		9 years 4 months 20 days
Weighted average discount rate	6.88%		6.88%

INCOME TAXES - Schedule of Deferred Tax Assets and Liabilities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Deferred tax assets:
Net operating loss carryforwards	$ 66,262	$ 68,921
Federal and state credits	17,197	16,895
Depreciation and amortization	16,203	15,778
Accruals and reserves	8,043	8,767
Stock based compensation	22,315	23,187
Inventory	1,671	1,646
Other	1,257	2,022
Total deferred tax assets	132,948	137,216
Deferred tax liabilities:
Discount on convertible senior notes	(22,215)	(8,125)
Deferred tax assets, net of deferred tax liabilities	110,733	129,091
Less: valuation allowance	(6,611)	(129,091)
Deferred tax assets, net of deferred tax liabilities	$ 104,122	$ 0

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY (Parenthetical) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020
Statement of Stockholders' Equity [Abstract]
Deferred tax associated with equity component of convertible debt	$ 20,450	$ 20,450

STOCK PLANS - Schedule of Valuation Assumptions (Details)	9 Months Ended
	Sep. 30, 2020 $ / shares shares
Weighted Average Grant Date Fair Value
Expected dividend rate (as a percent)	0.00%
Restricted Stock Units (RSUs)
Number of Units
Unvested at beginning of period (shares) \| shares	631,141
Granted (shares) \| shares	631,526
Vested (shares) \| shares	(238,060)
Forfeited (shares) \| shares	(88,308)
Unvested at end of period (shares) \| shares	936,299
Weighted Average Grant Date Fair Value
Unvested at beginning of period (usd per share) \| $ / shares	$ 41.87
Granted (usd per share) \| $ / shares	48.18
Vested (usd per share) \| $ / shares	41.91
Forfeited (usd per share) \| $ / shares	43.93
Unvested at end of period (usd per share) \| $ / shares	$ 45.92
Employee Stock Option
Weighted Average Grant Date Fair Value
Risk free interest rate (as a percent)	0.55%
Expected volatility (as a percent)	53.48%
Expected term of options (in years)	5 years 4 months 9 days

INVENTORIES (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Inventory Disclosure [Abstract]
Raw materials	$ 27,614	$ 20,019
Work-in-process	12,080	14,407
Finished goods	28,848	23,870
Total	$ 68,542	$ 58,296

FIXED ASSETS

9 Months Ended

Sep. 30, 2020

Property, Plant and Equipment [Abstract]

FIXED ASSETS

Fixed assets, net, summarized by major category, consist of the following (in thousands):


	September 30,		December 31,
	2020		2019
Machinery and equipment	$	75,489	$	70,078
Leasehold improvements	60,915		60,441
Computer equipment and software	11,178		8,942
Office furniture and equipment	2,242		1,882
Construction in progress	59,990		38,778
Total	209,814		180,121
Less: accumulated depreciation	(84,287)		(75,440)
Fixed assets, net	$	125,527	$	104,681

For the three months ended September 30, 2020 and 2019, depreciation expense was $3.1 million and $3.6 million, respectively. For the three months ended September 30, 2020 and 2019, there was $0.7 million and less than $0.1 million of capitalized interest on the construction of manufacturing sites, respectively.

For the nine months ended September 30, 2020 and 2019, depreciation expense was $8.9 million and $10.7 million, respectively. For the nine months ended September 30, 2020 and 2019, there was $1.5 million and less than $0.1 million of capitalized interest on the construction of manufacturing sites, respectively.

At September 30, 2020 and December 31, 2019, total fixed assets, net, includes leasehold improvements and manufacturing process equipment located in Europe in the amount of $66.8 million and $64.8 million, respectively.

During the nine months ended September 30, 2020, the Company established an asset retirement obligation of $0.2 million related to a new building lease which contains manufacturing, research and development and office space at its Science Center Campus in San Diego, California.

STOCK PLANS - Schedule of Stock Based Compensation Activity (Details)	9 Months Ended
	Sep. 30, 2020 $ / shares shares
Number of Options
Outstanding beginning of period (in shares) \| shares	6,706,378
Granted (in shares) \| shares	1,470,003
Exercised (in shares) \| shares	(1,129,762)
Forfeited (in shares) \| shares	(403,467)
Expired (in shares) \| shares	(44,177)
Outstanding end of period (in shares) \| shares	6,598,975
Weighted Average Exercise Price
Outstanding beginning of period (in dollars per share) \| $ / shares	$ 42.80
Granted (in dollars per share) \| $ / shares	47.27
Exercised (in dollars per share) \| $ / shares	32.08
Forfeited (in dollars per share) \| $ / shares	41.90
Expired (in dollars per share) \| $ / shares	61.63
Outstanding at end of period (in dollars per share) \| $ / shares	$ 45.56

LEASES - Schedule of maturities of operating lease liabilities (Details) $ in Thousands	Sep. 30, 2020 USD ($)
Leases [Abstract]
2020 (remaining three months)	$ 4,501
2021	10,745
2022	10,423
2023	10,697
2024	10,980
2025 through 2030	62,072
Total lease payments	109,418
Less: imputed interest	(29,515)
Total operating lease liabilities	$ 79,903

NET INCOME (LOSS) PER SHARE - Schedule of Computation of EPS (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Numerator:
Net income (loss)	$ 130,119	$ (6,087)	$ 131,008	$ (6,128)
Denominator:
Weighted average common shares outstanding - basic (in shares)	42,928	41,645	42,393	41,423
Computation of diluted securities:
Weighted average number of shares outstanding - diluted (in shares)	44,275	41,645	43,333	41,423
Net income (loss) per share:
Basic net income (loss) per common share (in USD per share)	$ 3.03	$ (0.15)	$ 3.09	$ (0.15)
Diluted net income (loss) per common share (in USD per share)	$ 2.94	$ (0.15)	$ 3.02	$ (0.15)
Employee Stock Option
Computation of diluted securities:
Dilutive effect of share based compensation arrangements (in shares)	1,086	0	740	0
Restricted Stock Units (RSUs)
Computation of diluted securities:
Dilutive effect of share based compensation arrangements (in shares)	261	0	200	0

ACQUISITION–RELATED CHARGES (GAINS) AND PRODUCT DISCONTINUATION, NET

3 Months Ended

9 Months Ended

Sep. 30, 2019

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

MyoScience Acquisition

The Company recognized charges of $0.8 million and gains of $1.4 million in the three and nine months ended September 30, 2020, respectively, primarily related to changes in the fair value of contingent consideration from the MyoScience Acquisition. There were $7.3 million in charges for the fair value of contingent consideration in the three and nine months ended September 30, 2019. In addition, the Company also recognized charges of $0.2 million and $4.8 million in the three and nine months ended September 30, 2019, respectively, related to separation costs, asset write-downs and other restructuring charges. See Note 10, Financial Instruments, for information regarding the methods and key assumptions used in the fair value measurements of contingent consideration.

DepoCyt(e) Discontinuation

The Company recorded gains related to its DepoCyt(e) discontinuation activities of less than $0.1 million and $0.2 million in the three and nine month periods ended September 30, 2020, respectively. The Company recorded costs for its DepoCyt(e) discontinuation activities of $0.1 million in both the three and nine month periods ended September 30, 2019. The Company ceased all production of DepoCyt(e) as of June 30, 2017. Cash payments for the DepoCyt(e) manufacturing facility were substantially finalized in the third quarter of 2020.

Summary of Acquisition-Related Restructuring Activities and DepoCyt(e) Discontinuation Costs

The Company’s acquisition-related restructuring and DepoCyt(e) discontinuation costs as of September 30, 2020 are summarized below (in thousands):


	Severance and Related Costs		Asset Retirement Obligations, Other Restructuring and Discontinuation Costs		Total
Balance at December 31, 2019	$	81	$	558	$	639
Charges incurred	—		(39)		(39)
Cash payments made	(81)		(500)		(581)
Balance at September 30, 2020	$	—	$	19	$	19

COMMERCIAL PARTNERS

DePuy Synthes Sales, Inc.

In July 2020, the Company announced the termination of the Co-Promotion Agreement, dated January 24, 2017 between the Company and DePuy Synthes Sales Inc. to jointly market and promote the use of EXPAREL for orthopedic procedures in the United States. The Company currently estimates termination-related costs or payments to be up to $12.0 million, which will be recorded in selling, general and administrative expenses over the remaining contract service period.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - New Accounting Pronouncements (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019	Jan. 01, 2019
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total operating lease liabilities	$ 79,903
ROU asset	76,047	$ 38,124
Accumulated deficit	(268,390)	$ (399,398)
Accounts receivable, allowance for credit loss	$ 0
Accounting Standards Update 2016-02
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Total operating lease liabilities			$ 36,500
ROU asset			27,600
Accounting Standards Update 2016-02 \| Cumulative Effect, Period of Adoption, Adjustment
Revenue, Initial Application Period Cumulative Effect Transition [Line Items]
Accumulated deficit			$ 200

STOCK PLANS - Narrative (Details)	9 Months Ended
STOCK PLANS - Narrative (Details)	Sep. 30, 2020 offeringPeriod $ / shares shares
Stock Incentive Plans
Weighted average fair value (in dollars per share) \| $ / shares	$ 22.30
Purchase price of common stock, ESPP (as a percent)	85.00%
Shares issued under employee stock purchase plan (shares) \| shares	36,668
Employee Stock
Stock Incentive Plans
Number of offering periods for ESPP \| offeringPeriod	2
ESPP purchasing period	6 months

INCOME TAXES

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

INCOME TAXES

Income (loss) before income taxes and total income tax (benefit) expense is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Income (loss) before income taxes:
Domestic	$	8,175	$	(3,205)	$	10,154	$	(2,183)
Foreign	(2,025)		(2,611)		(2,759)		(5,024)
Total income (loss) before income taxes	$	6,150	$	(5,816)	$	7,395	$	(7,207)

Current taxes:
Federal	$	—	$	—	$	—	$	—
State	603		271		959		749

Total current taxes	$	603	$	271	$	959	$	749
Deferred taxes:
Federal	$	(104,389)	$	—	$	(104,389)	$	(1,828)
State	(20,183)		—		(20,183)		—

Total deferred taxes	$	(124,572)	$	—	$	(124,572)	$	(1,828)

Total income tax (benefit) expense	$	(123,969)	$	271	$	(123,613)	$	(1,079)

For the three months ended September 30, 2020 and 2019, the Company recorded an income tax benefit of $124.0 million and income tax expense of $0.3 million, respectively. For the nine months ended September 30, 2020 and 2019, the Company recorded an income tax benefit of $123.6 million and $1.1 million, respectively. During the three months ended September 30,

2020, the Company recorded a $124.6 million income tax benefit relating to the release of a valuation allowance on its net deferred assets. The income tax benefit for the nine months ended September 30, 2019 is primarily related to the MyoScience Acquisition and a $1.8 million reduction in the Company’s valuation allowance on its deferred tax assets due to the acquisition.

Deferred taxes reflect the tax effects of the differences between the amounts recorded as assets and liabilities for financial reporting purposes and the comparable amounts recorded for income tax purposes. A full valuation allowance had been recorded against the Company’s net deferred tax balance as of December 31, 2019 because at that time it was more likely than not that its net deferred tax assets would not be realizable. At each reporting date, the Company considers new evidence, both positive and negative, that could affect its view of the future realization of deferred tax assets. As of September 30, 2020, in part because in the current year the Company achieved three years of cumulative pretax income in the U.S. federal and state tax jurisdictions, and based on its most recent forecasts, the Company determined that there is sufficient positive evidence to conclude that it is more likely than not that additional deferred taxes of $124.6 million are realizable and, therefore, reduced the valuation allowance accordingly.

During the nine months ended September 30, 2020, the Company established a deferred tax liability of $20.5 million with an offset to additional paid-in capital resulting from the conversion feature of the 2025 Notes. The initial difference between the book value of convertible debt issued with a beneficial conversion feature and its tax basis is a temporary difference.

The significant components of the Company’s deferred tax assets and liabilities at September 30, 2020 and December 31, 2019 are as follows (in thousands):


	September 30,		December 31,
	2020		2019
Deferred tax assets:
Net operating loss carryforwards	$	66,262	$	68,921
Federal and state credits	17,197		16,895
Depreciation and amortization	16,203		15,778
Accruals and reserves	8,043		8,767

Stock based compensation	22,315		23,187
Inventory	1,671		1,646
Other	1,257		2,022
Total deferred tax assets	132,948		137,216
Deferred tax liabilities:
Discount on convertible senior notes	(22,215)		(8,125)
Deferred tax assets, net of deferred tax liabilities	110,733		129,091
Less: valuation allowance	(6,611)		(129,091)
Net deferred tax assets	$	104,122	$	—

As of September 30, 2020, the Company’s deferred tax assets were primarily the result of U.S. net operating losses, or NOLs. As of September 30, 2020, the Company had federal, state, and foreign NOL carry forwards of approximately $255.7 million, $182.3 million, and $5.8 million, respectively. All federal carry forward losses were generated prior to 2018 and will expire in 2025 through 2037. The state carry forwards will expire at various dates beginning in 2025. The foreign NOLs have an indefinite expiration.

Utilization of NOLs may be subject to a substantial limitation pursuant to Section 382 of the Internal Revenue Code, or IRC, of 1986, as amended, or Section 382, as well as similar state statutes in the event of an ownership change. Such ownership changes have occurred in the past and could occur again in the future. Under Section 382 of the IRC, if a corporation undergoes an “ownership change” generally defined as a greater than 50% change (by value) in its equity ownership over a three-year period, the corporation’s ability to use its pre-change NOLs and other pre-change tax attributes (such as research and development tax credits) to offset its post-change income may be limited. The Company may experience ownership changes in the future as a result of shifts in its stock ownership, some of which are outside the Company’s control. Ownership changes in future periods may place additional limits on the Company’s ability to utilize its net operating loss and tax credit carry forwards. In addition, at the state level, there may be periods during which the use of NOLs is suspended or otherwise limited, which could accelerate or permanently increase state taxes owed.

- Definition

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

+ References + Details

FIXED ASSETS (Details) - USD ($)	3 Months Ended		9 Months Ended
FIXED ASSETS (Details) - USD ($)	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019
FIXED ASSETS
Total	$ 209,814,000		$ 209,814,000		$ 180,121,000
Less: accumulated depreciation	(84,287,000)		(84,287,000)		(75,440,000)
Fixed assets, net	125,527,000		125,527,000		104,681,000
Depreciation expense	3,100,000	$ 3,600,000	8,900,000	$ 10,700,000
Capitalized interest	691,000	4,000	1,448,000	4,000
Foreign property, plant and equipment, net	66,800,000		66,800,000		64,800,000
Asset retirement obligation	200,000		200,000
Machinery and equipment
FIXED ASSETS
Total	75,489,000		75,489,000		70,078,000
Leasehold improvements
FIXED ASSETS
Total	60,915,000		60,915,000		60,441,000
Computer equipment and software
FIXED ASSETS
Total	11,178,000		11,178,000		8,942,000
Office furniture and equipment
FIXED ASSETS
Total	2,242,000		2,242,000		1,882,000
Construction in progress
FIXED ASSETS
Total	59,990,000		59,990,000		$ 38,778,000
Capitalized interest	$ 700,000	$ 100,000	$ 1,500,000	$ 100,000

GOODWILL AND INTANGIBLE ASSETS - Schedule of Finite-Lived Intangible Assets Acquired During Period (Details) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Mar. 31, 2020	Sep. 30, 2020	Dec. 31, 2019
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value		$ 110,090	$ 110,090
Accumulated Amortization		(11,603)	(5,703)
Intangible Assets, Net		98,487	104,387
Developed technology
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value		110,000	110,000
Accumulated Amortization		(11,590)	(5,696)
Intangible Assets, Net		$ 98,410	104,304
Estimated Useful Life	14 years	14 years
Customer relationships
Acquired Finite-Lived Intangible Assets [Line Items]
Gross Carrying Value		$ 90	90
Accumulated Amortization		(13)	(7)
Intangible Assets, Net		$ 77	$ 83
Estimated Useful Life	10 years	10 years

DEBT - Narrative (Details)			3 Months Ended		9 Months Ended
DEBT - Narrative (Details)	Jul. 10, 2020 USD ($)	Mar. 13, 2017 USD ($) segment $ / shares	Sep. 30, 2020 USD ($) segment $ / shares	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) $ / shares	Sep. 30, 2019 USD ($)	Jul. 07, 2020 USD ($) $ / shares	Mar. 07, 2017 $ / shares
DEBT AND FINANCING OBLIGATIONS
Settlement period - convertible debt conversion request					40 days
Debt instrument, principal amount denominator for conversion into common stock			$ 1,000		$ 1,000		$ 1,000
Closing sale price (in dollars per share) \| $ / shares			$ 60.12		$ 60.12
Deferred tax associated with equity component of convertible debt			$ 20,450,000		$ 20,450,000
Amortization period of transaction costs attributable to liability component of convertible debt					5 years
Transaction costs attributable to equity component of convertible debt					$ 2,700,000
Loss on early extinguishment of debt			8,071,000	$ 0	$ 8,071,000	$ 0
Convertible Senior Notes Due 2022
DEBT AND FINANCING OBLIGATIONS
Settlement period - convertible debt conversion request					40 days
Initial conversion rate of common stock per $1,000 of principal amount of Notes		0.0149491
Debt instrument, principal amount denominator for conversion into common stock		$ 1,000
Initial conversion price of notes into common stock (in dollars per share) \| $ / shares		$ 66.89
Convertible debt, premium on common stock		37.50%
Closing sale price (in dollars per share) \| $ / shares								$ 48.65
Convertible Senior Notes Due 2022 \| Conversion terms prior to close of business on business day immediately proceeding October 1, 2021
DEBT AND FINANCING OBLIGATIONS
Threshold trading days \| segment		20
Threshold consecutive trading days \| segment		30
Threshold percentage stock price trigger		130.00%
Market price per $1000 of principal amount of notes			$ 1,149		$ 1,149
Convertible Senior Notes Due 2022 \| Debt Redemption Terms on or after April 1, 2020
DEBT AND FINANCING OBLIGATIONS
Threshold trading days \| segment		20
Threshold consecutive trading days \| segment		30
Threshold percentage stock price trigger		130.00%
Debt instrument, percentage of principal amount for computation of redemption price		100.00%
Conversion obligation, number of trading days prior to date of notice of redemption		5 days
Convertible Senior Notes Due 2025
DEBT AND FINANCING OBLIGATIONS
Percentage of last sale price of common stock			98.00%
Initial conversion rate of common stock per $1,000 of principal amount of Notes					13.9324
Initial conversion price of notes into common stock (in dollars per share) \| $ / shares		$ 71.78					$ 71.78
Convertible debt, premium on common stock							32.50%
Closing sale price (in dollars per share) \| $ / shares							$ 54.17
Market price per $1000 of principal amount of notes			$ 1,096		$ 1,096
Debt instrument, percentage of principal amount for computation of redemption price			100.00%
Convertible Senior Notes Due 2025 \| Debt Conversion Terms Business Day Immediately Preceding February 3, 2020
DEBT AND FINANCING OBLIGATIONS
Threshold trading days \| segment			20
Threshold consecutive trading days \| segment			30
Threshold percentage stock price trigger			130.00%
Convertible Senior Notes Due 2025 \| Debt Redemption Terms on or after August 1, 2023
DEBT AND FINANCING OBLIGATIONS
Threshold trading days \| segment			20
Threshold consecutive trading days \| segment			30
Threshold percentage stock price trigger			130.00%
Debt instrument, percentage of principal amount for computation of redemption price			100.00%
Unsecured Debt \| Convertible Senior Notes Due 2022
DEBT AND FINANCING OBLIGATIONS
Debt instrument, face amount	$ 160,000,000.0
Stated interest rate (as a percent)	2.375%	2.375%	2.375%		2.375%
Debt issued in private placement		$ 345,000,000.0
Debt instrument, repurchased face amount	$ 185,000,000.0
Repayments of debt	211,100,000
Loss on early extinguishment of debt	8,100,000
Unsecured Debt \| Convertible Senior Notes Due 2025
DEBT AND FINANCING OBLIGATIONS
Debt instrument, face amount	$ 402,500,000
Stated interest rate (as a percent)	0.75%		0.75%		0.75%
Debt issued in private placement		$ 390,000,000.0			$ 402,500,000
Convertible Debt \| Convertible Senior Notes Due 2025
DEBT AND FINANCING OBLIGATIONS
Convertible debt, carrying amount of liability component			$ 314,700,000		$ 314,700,000
Assumed borrowing rate			5.78%		5.78%
Convertible debt, carrying amount of equity component			$ 87,800,000		$ 87,800,000
Amortization period of equity component of convertible debt					5 years
Total transaction costs					$ 12,500,000

MYOSCIENCE ACQUISITION (Details) - USD ($) $ in Thousands	Apr. 09, 2019	Sep. 30, 2020	Dec. 31, 2019
Business Acquisition [Line Items]
Contingent consideration, current		$ 5,406	$ 18,179
Achievement of Regulatory Milestone
Business Acquisition [Line Items]
Acquisition-related contingent consideration		15,000
Myoscience Acquisition
Business Acquisition [Line Items]
Total consideration transferred	$ 147,500
Initial cash payment	119,000
Fair value of contingent consideration	28,500
Contingent consideration	$ 100,000
Contingent consideration, current		58,000
Payment term	60 days
Acquisition-related contingent consideration		$ 21,600

FINANCIAL INSTRUMENTS - Fair Value of Contingent Consideration Rollforward (Details) - Contingent Consideration $ in Thousands	9 Months Ended
	Sep. 30, 2020 USD ($)
Fair Value, Liabilities Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward]
Balance at December 31, 2019	$ 38,142
Fair value adjustments and accretion	(1,560)
Payments made	(15,000)
Balance at September 30, 2020	$ 21,582

INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
INCOME TAXES - Narrative (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Income Tax Contingency [Line Items]
Total income tax (benefit) expense	$ (123,969)	$ 271	$ (123,613)	$ (1,079)
Reduction of valuation allowance, deferred tax assets	124,600		124,600	$ 1,800
Domestic Tax Authority
Income Tax Contingency [Line Items]
Operating loss carryforwards	255,700		255,700
State and Local Jurisdiction
Income Tax Contingency [Line Items]
Operating loss carryforwards	182,300		182,300
Foreign Tax Authority
Income Tax Contingency [Line Items]
Operating loss carryforwards	$ 5,800		$ 5,800

- Definition

Amount of current income tax expense (benefit) and deferred income tax expense (benefit) pertaining to continuing operations.

+ References + Details

DEBT

9 Months Ended

Sep. 30, 2020

Debt Disclosure [Abstract]

DEBT

Convertible Senior Notes Due 2025

On July 10, 2020, the Company completed a private placement of $402.5 million in aggregate principal amount of its 0.750% convertible senior notes due 2025, or 2025 Notes, and entered into an indenture, or 2025 Indenture, with respect to the 2025 Notes. The 2025 Notes accrue interest at a fixed rate of 0.750% per year, payable semiannually in arrears on February 1st and August 1st of each year, beginning on February 1, 2021. The 2025 Notes mature on August 1, 2025.

The total debt composition of the 2025 Notes is as follows (in thousands):


	September 30,		December 31,
	2020		2019
0.750% convertible senior notes due 2025	$	402,500	$	—
Deferred financing costs	(9,373)		—
Discount on debt	(84,346)		—
Total debt, net of debt discount and deferred financing costs	$	308,781	$	—

The net proceeds from the issuance of the 2025 Notes were approximately $390.0 million, after deducting commissions and the offering expenses by the Company. A portion of the net proceeds from the 2025 Notes were used by the Company to

repurchase $185.0 million in aggregate principal amount of its outstanding 2.375% convertible senior notes due 2022 in privately-negotiated transactions for a total of $211.1 million of cash (including accrued interest).

Holders may convert the 2025 Notes at any time prior to the close of business on the business day immediately preceding February 3, 2025, only under the following circumstances:

(i) during any calendar quarter commencing after the calendar quarter ending on September 30, 2020 (and only during such calendar quarter), if the last reported sale price of the Company’s common stock for at least 20 trading days (whether or not consecutive) during a period of 30 consecutive trading days ending on the last trading day of the immediately preceding calendar quarter is greater than or equal to 130% of the conversion price on each applicable trading day;

(ii) during the five business day period immediately after any five consecutive trading day period (the ‘‘measurement period’’) in which the trading price (as defined in the 2025 Indenture) per $1,000 principal amount of notes for each trading day of the measurement period was less than 98% of the product of the last reported sale price of the Company’s common stock and the conversion rate on each such trading day;

(iii) upon the occurrence of specified corporate events, including a merger or a sale of all or substantially all of the Company’s assets; or

(iv) if the Company calls the 2025 Notes for redemption, until the close of business on the business day immediately preceding the redemption date.

During the quarter ended September 30, 2020, none of these conditions for conversion were met.

On or after February 3, 2025, until the close of business on the second scheduled trading day immediately preceding August 1, 2025, holders may convert their 2025 Notes at any time.

Upon conversion, holders will receive the principal amount of their 2025 Notes and any excess conversion value, calculated based on the per share volume-weighted average price for each of the 40 consecutive trading days during the observation period (as more fully described in the 2025 Indenture). For both the principal and excess conversion value, holders may receive cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s option. The initial conversion rate for the 2025 Notes is 13.9324 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of $71.78 per share of the Company’s common stock. The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. The initial conversion price of the 2025 Notes represents a premium of approximately 32.5% to the closing sale price of $54.17 per share of the Company’s common stock on the Nasdaq Global Select Market on July 7, 2020, the date that the Company priced the private offering of the 2025 Notes.

As of September 30, 2020, the 2025 Notes had a market price of $1,096 per $1,000 principal amount. In the event of conversion, holders would forgo all future interest payments, any unpaid accrued interest and the possibility of further stock price appreciation. Upon the receipt of conversion requests, the settlement of the 2025 Notes will be paid pursuant to the terms of the 2025 Indenture. In the event that all of the 2025 Notes are converted, the Company would be required to repay the $402.5 million in principal value and any conversion premium in any combination of cash and shares of its common stock (at the Company’s option).

Prior to August 1, 2023, the Company may not redeem the 2025 Notes. On or after August 1, 2023 (but, in the case of a redemption of less than all of the outstanding 2025 Notes, no later than the 40th scheduled trading day immediately before the maturity date), the Company may redeem for cash all or part of the 2025 Notes if the last reported sale price (as defined in the 2025 Indenture) of the Company’s common stock has been at least 130% of the conversion price then in effect for (i) each of at least 20 trading days (whether or not consecutive) during any 30 consecutive trading days ending on, and including, the trading day immediately before the date the Company sends the related notice of redemption and (ii) the trading day immediately before the date the Company sends such notice. The redemption price will equal the sum of (i) 100% of the principal amount of the 2025 Notes being redeemed, plus (ii) accrued and unpaid interest, including additional interest, if any, to, but excluding, the redemption date. In addition, calling the 2025 Notes for redemption will constitute a “make-whole fundamental change ” (as defined in the 2025 Indenture) and will, in certain circumstances, increase the conversion rate applicable to the conversion of such notes if it is converted in connection with the redemption. No sinking fund is provided for the 2025 Notes.

If the Company undergoes a fundamental change, as defined in the 2025 Indenture, subject to certain conditions, holders of the 2025 Notes may require the Company to repurchase for cash all or part of their 2025 Notes at a repurchase price equal to

100% of the principal amount of the 2025 Notes to be repurchased, plus accrued and unpaid interest to, but excluding, the fundamental change repurchase date. In addition, if a ‘‘make-whole fundamental change’’ (as defined in the 2025 Indenture) occurs prior to August 1, 2025, the Company will, in certain circumstances, increase the conversion rate for a holder who elects to convert its notes in connection with the make-whole fundamental change.

The 2025 Notes are the Company’s general unsecured obligations that rank senior in right of payment to all of its indebtedness that is expressly subordinated in right of payment to the 2025 Notes, and equal in right of payment to the Company’s unsecured indebtedness. The 2025 Notes are also effectively junior in right of payment to any of the Company’s secured indebtedness to the extent of the value of the assets securing such indebtedness, and are structurally subordinated to any debt or other liabilities (including trade payables) of the Company’s subsidiaries.

While the 2025 Notes are currently classified on the Company’s consolidated balance sheet at September 30, 2020 as long-term debt, the future convertibility and resulting balance sheet classification of this liability is monitored at each quarterly reporting date and is analyzed dependent upon market prices of the Company’s common stock during the prescribed measurement periods. In the event that the holders of the 2025 Notes have the election to convert the 2025 Notes at any time during the prescribed measurement period, the 2025 Notes would then be considered a current obligation and classified as such.

Under ASC 470-20, Debt with Conversion and Other Options, an entity must separately account for the liability and equity components of convertible debt instruments (such as the 2025 Notes) that may be settled entirely or partially in cash upon conversion in a manner that reflects the issuer’s economic interest cost. The liability component of the instrument is valued in a manner that reflects the market interest rate for a similar nonconvertible instrument at the date of issuance. The initial carrying value of the liability component of $314.7 million was calculated using a 5.78% assumed borrowing rate. The equity component of $87.8 million, representing the conversion option, was determined by deducting the fair value of the liability component from the par value of the 2025 Notes and is recorded in additional paid-in capital on the consolidated balance sheet at the issuance date. The equity component is treated as a discount on the liability component of the 2025 Notes, which is amortized over the five-year term of the 2025 Notes using the effective interest rate method. The equity component is not re-measured as long as it continues to meet the conditions for equity classification. A deferred tax liability was recognized in the amount of $20.5 million, with the offsetting amount recorded in additional paid-in capital. See Note 14, Income Taxes, for information regarding the Company's deferred taxes.

The Company allocated the total transaction costs of approximately $12.5 million related to the issuance of the 2025 Notes to the liability and equity components of the 2025 Notes based on their relative values. Transaction costs attributable to the liability component are amortized to interest expense over the five-year term of the 2025 Notes, and transaction costs attributable to the equity component totaling $2.7 million are netted with the equity component in stockholders’ equity.

The 2025 Notes do not contain any financial or operating covenants or any restrictions on the payment of dividends, the issuance of other indebtedness or the issuance or repurchase of securities by the Company. The 2025 Indenture contains customary events of default with respect to the 2025 Notes, including that upon certain events of default, 100% of the principal and accrued and unpaid interest on the 2025 Notes will automatically become due and payable.

Convertible Senior Notes Due 2022

On March 13, 2017, the Company completed a private placement of $345.0 million in aggregate principal amount of 2.375% convertible senior notes due 2022, or 2022 Notes, and entered into an indenture, or 2022 Indenture, with respect to the 2022 Notes. The 2022 Notes accrue interest at a fixed rate of 2.375% per year, payable semiannually in arrears on April 1st and October 1st of each year. The 2022 Notes mature on April 1, 2022. As discussed above, in July 2020, the Company used part of the net proceeds from the issuance of the 2025 Notes to repurchase $185.0 million aggregate principal amount of the 2022 Notes in privately-negotiated transactions for an aggregate of $211.1 million in cash (including accrued interest). The partial repurchase of the 2022 Notes resulted in an $8.1 million loss on early extinguishment of debt.

The total debt composition of the 2022 Notes is as follows (in thousands):


	September 30,		December 31,
	2020		2019
2.375% convertible senior notes due 2022	$	160,000	$	345,000
Deferred financing costs	(1,299)		(4,143)
Discount on debt	(11,018)		(34,812)
Total debt, net of debt discount and deferred financing costs	$	147,683	$	306,045

Holders may convert their 2022 Notes prior to October 1, 2021 only if certain circumstances are met, including if during the previous calendar quarter, the last reported sales price of the Company’s common stock was greater than or equal to 130% of the conversion price then applicable for at least 20 out of the last 30 consecutive trading days of the quarter. During the quarter ended September 30, 2020, this condition for conversion was not met.

On or after October 1, 2021, until the close of business on the second scheduled trading day immediately preceding April 1, 2022, holders may convert their 2022 Notes at any time.

Upon conversion, holders will receive the principal amount of their 2022 Notes and any excess conversion value, calculated based on the per share volume-weighted average price for each of the 40 consecutive trading days during the observation period (as more fully described in the 2022 Indenture). For both the principal and excess conversion value, holders may receive cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s option. The initial conversion rate for the 2022 Notes is 14.9491 shares of common stock per $1,000 principal amount, which is equivalent to an initial conversion price of $66.89 per share of the Company’s common stock. The conversion rate will be subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. The initial conversion price of the 2022 Notes represents a premium of approximately 37.5% to the closing sale price of $48.65 per share of the Company’s common stock on the Nasdaq Global Select Market on March 7, 2017, the date that the Company priced the private offering of the 2022 Notes.

As of September 30, 2020, the 2022 Notes had a market price of $1,149 per $1,000 principal amount. In the event of conversion, holders would forgo all future interest payments, any unpaid accrued interest and the possibility of stock price appreciation. Upon the receipt of conversion requests, the settlement of the 2022 Notes will be paid pursuant to the terms of the 2022 Indenture. In the event that all of the 2022 Notes are settled, the Company would be required to repay the remaining $160.0 million in principal value and any conversion premium in any combination of cash and shares of its common stock (at the Company’s option).

As of April 1, 2020, the Company may redeem for cash, shares of the Company’s common stock or a combination of cash and shares of the Company’s common stock, at the Company’s option, all or part of the 2022 Notes if the last reported sale price (as defined in the 2022 Indenture) of the Company’s common stock has been at least 130% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) during any 30 consecutive trading-day period ending within five trading days prior to the date on which the Company provides notice of redemption. This condition was not met during the quarter ended September 30, 2020. The redemption price will equal the sum of (i) 100% of the principal amount of the 2022 Notes being redeemed, plus (ii) accrued and unpaid interest, including additional interest, if any, to, but excluding, the redemption date. In addition, calling the 2022 Notes for redemption will constitute a “make whole fundamental change” (as defined in the 2022 Indenture) and will, in certain circumstances, increase the conversion rate applicable to the conversion of such notes if it is converted in connection with the redemption. No sinking fund is provided for the 2022 Notes.

While the 2022 Notes are currently classified on the Company’s consolidated balance sheet at September 30, 2020 as long-term debt, the future convertibility and resulting balance sheet classification of this liability is monitored at each quarterly reporting date and is analyzed dependent upon market prices of the Company’s common stock during the prescribed measurement periods. In the event that the holders of the 2022 Notes have the right to convert the 2022 Notes at any time during the prescribed measurement period, the 2022 Notes would then be considered a current obligation and classified as such.

Interest Expense

The following table sets forth the total interest expense recognized in the periods presented (dollar amounts in thousands):


	Three Months Ended September 30,						Nine Months Ended September 30,
	2020			2019			2020			2019
Contractual interest expense	$	1,764		$	2,048		$	5,861		$	6,146
Amortization of debt issuance costs	629			429			1,512			1,273
Amortization of debt discount	5,430			3,467			12,684			10,216
Capitalized interest and other (Note 6)	(691)			(4)			(1,448)			(4)
Total	$	7,132		$	5,940		$	18,609		$	17,631

Effective interest rate on convertible senior notes	6.78		%	7.81		%	7.35		%	7.81		%

MYOSCIENCE ACQUISITION - Unaudited Pro Forma Summary of Operations (Details) - Myoscience Acquisition $ / shares in Units, $ in Thousands	9 Months Ended
	Sep. 30, 2019 USD ($) $ / shares
Business Acquisition [Line Items]
Total revenues	$ 301,051
Net loss	$ (10,633)
Pro forma basic and diluted net loss per share (usd per share) \| $ / shares	$ (0.26)

MYOSCIENCE ACQUISITION

9 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

MYOSCIENCE ACQUISITION

MYOSCIENCE ACQUISITIONOn April 9, 2019, the Company acquired MyoScience (the “MyoScience Acquisition”), a privately-held medical device company, pursuant to the terms of an Agreement and Plan of Merger, under which MyoScience became a wholly-owned subsidiary of the Company and was renamed Pacira CryoTech, Inc. The total consideration was $147.5 million, which included a net cash payment of $119.0 million and the fair value of contingent consideration in the amount of $28.5 million. The contingent consideration consisted of contingent milestone payments up to an aggregate of $100.0 million upon the achievement of certain regulatory and commercial milestones, of which $58.0 million are available as of September 30, 2020. The Company’s obligation to make milestone payments is limited to those milestones achieved through December 31, 2023, and are to be paid within 60 days of the end of the fiscal quarter of achievement. During the nine months ended September 30, 2020, the Company made $15.0 million of cash payments for the achievement of two regulatory milestones. See Note 10, Financial Instruments, for information on the measurement and amounts recognized in the Company’s condensed consolidated financial statements for contingent consideration. See Note 16, Commitments and Contingencies, for information on a dispute regarding the achievement of certain milestone payments.

Unaudited Pro Forma Summary of Operations

The following table shows the unaudited pro forma summary of operations for the nine months ended September 30, 2019 as if the MyoScience Acquisition had occurred on January 1, 2019. This pro forma information does not purport to represent what the Company’s actual results would have been and is not indicative of what such results would be expected for any future period (in thousands, except per share amounts):


	Nine Months Ended September 30, 2019
Total revenues	$	301,051
Net loss	$	(10,633)
Pro forma basic and diluted net loss per share	$	(0.26)

The unaudited pro forma financial information was prepared using the acquisition method of accounting and was based on the historical financial information of the Company and MyoScience. The summary pro forma financial information primarily reflects the following pro forma adjustments:

•Removal of the acquisition-related transaction fees and costs, including certain stock-based compensation and other compensation expenses related to the acquisition;

•Removal of the income tax benefit resulting from the Company decreasing its existing valuation allowance;

•Removal of MyoScience’s loss on extinguishment of debt and warrant expense;

•Removal of MyoScience’s interest expense;

•Adjustments to the Company’s interest income for the cash used to acquire MyoScience; and

•The addition of amortization expense on the acquired developed technology and customer relationship intangible assets.

STOCKHOLDERS' EQUITY

9 Months Ended

Sep. 30, 2020

Stockholders' Equity Note [Abstract]

Stockholders' Equity

STOCKHOLDERS’ EQUITY

Accumulated Other Comprehensive Income (Loss)

The following table illustrates the changes in the balances of the Company’s accumulated other comprehensive income (loss) for the periods presented (in thousands):


	Nine Months Ended September 30,
Net unrealized gains (losses) from available-for-sale investments:	2020		2019
Balance at beginning of period	$	322	$	(280)
Other comprehensive income before reclassifications	525		727
Amounts reclassified from accumulated other comprehensive income (loss)	—		—
Balance at end of period	$	847	$	447

INVENTORIES

9 Months Ended

Sep. 30, 2020

Inventory Disclosure [Abstract]

INVENTORIES

The components of inventories, net are as follows (in thousands):


	September 30,		December 31,
	2020		2019
Raw materials	$	27,614	$	20,019
Work-in-process	12,080		14,407
Finished goods	28,848		23,870
Total	$	68,542	$	58,296

In December 2019, the Company’s contract manufacturer experienced a media fill failure, as part of its routine aseptic manufacturing requalification program, and an investigation was completed in April 2020. Based on the results of the investigation, the Company determined that no inventory reserves are required related to the media fill failure, and that all inventory in question has been determined to be sellable. The Company resumed production on this manufacturing line in May 2020.

COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Millions	1 Months Ended		12 Months Ended
	Oct. 31, 2020	Dec. 31, 2019	Dec. 31, 2019
Loss Contingencies [Line Items]
Litigation investigation term			5 years
Litigation settlement, amount awarded to other party		$ 3.5
Fortis \| Subsequent Event
Loss Contingencies [Line Items]
Loss contingency, damages sought	$ 40.0

GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($)	3 Months Ended		9 Months Ended
GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($)	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019	Dec. 31, 2019	Apr. 09, 2019
Goodwill
Change in carrying value of goodwill during period	$ 0		$ 0
Goodwill	99,547,000		99,547,000		$ 99,547,000
Goodwill recorded in connection with the acquisition	99,547,000		99,547,000		99,547,000
Amortization of acquired intangible assets	1,967,000	$ 1,967,000	5,900,000	$ 3,736,000
Amortization expense, remainder of fiscal year	2,000,000.0		2,000,000.0
Amortization expense, 2020-2032	7,900,000		7,900,000
Amortization expense, 2033	2,200,000		2,200,000
Skye Pharma Holding Inc.
Goodwill
Goodwill	62,000,000.0		62,000,000.0
Goodwill recorded in connection with the acquisition	62,000,000.0		62,000,000.0
Myoscience Acquisition
Goodwill
Goodwill						$ 37,500,000
Goodwill recorded in connection with the acquisition						$ 37,500,000
Skye Pharma Holding Inc.
Goodwill
Total milestone payments yet to be paid for sale of product in connection with acquisition					$ 36,000,000.0
Upon first commercial sale in the United States
Goodwill
Milestone payments for EXPAREL agreed in connection with acquisition	10,000,000.0		10,000,000.0
Upon first commercial sale in a major EU country (United Kingdom, France, Germany, Italy and Spain)
Goodwill
Milestone payments for EXPAREL agreed in connection with acquisition	4,000,000.0		4,000,000.0
When annual net sales collected reach $100.0 million
Goodwill
Milestone payments for EXPAREL agreed in connection with acquisition	8,000,000.0		8,000,000.0
Annual net sales threshold	100,000,000.0		100,000,000.0
When annual net sales collected reach $250.0 million
Goodwill
Milestone payments for EXPAREL agreed in connection with acquisition	8,000,000.0		8,000,000.0
Annual net sales threshold	250,000,000.0		250,000,000.0
When annual net sales collected reach $500.0 million
Goodwill
Milestone payments for EXPAREL agreed in connection with acquisition	32,000,000.0		32,000,000.0
Annual net sales threshold	$ 500,000,000.0		$ 500,000,000.0

NET INCOME (LOSS) PER SHARE (Tables)

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

Schedule of computation of basic and diluted loss per share

The following table sets forth the computation of basic and diluted net income (loss) per share for the three and nine months ended September 30, 2020 and 2019 (in thousands, except per share amounts):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Numerator:
Net income (loss)	$	130,119	$	(6,087)	$	131,008	$	(6,128)







Denominator:
Weighted average common shares outstanding—basic	42,928		41,645		42,393		41,423
Computation of diluted securities:
Dilutive effect of stock options	1,086		—		740		—
Dilutive effect of RSUs	261		—		200		—



Weighted average common shares outstanding—diluted	44,275		41,645		43,333		41,423
Net income (loss) per share:
Basic net income (loss) per common share	$	3.03	$	(0.15)	$	3.09	$	(0.15)
Diluted net income (loss) per common share	$	2.94	$	(0.15)	$	3.02	$	(0.15)

Schedule of potential dilutive effect of the securities excluded from the calculation of diluted loss per share

The following outstanding stock options, RSUs and ESPP purchase options are antidilutive in the periods presented (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
Weighted average number of stock options	3,585	5,443	4,746	4,816
Weighted average number of RSUs	5	266	126	154

Weighted average ESPP purchase options	25	33	22	23

Total	3,615	5,742	4,894	4,993

GOODWILL AND INTANGIBLE ASSETS (Tables)

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination

Intangible assets, net, consist of the developed technology and customer relationships that were acquired in the MyoScience Acquisition and are summarized as follows (in thousands):


September 30, 2020	Gross Carrying Value		Accumulated Amortization		Intangible Assets, Net		Estimated Useful Life
Developed technology	$	110,000	$	(11,590)	$	98,410	14 years
Customer relationships	90		(13)		77		10 years
Total intangible assets	$	110,090	$	(11,603)	$	98,487


December 31, 2019	Gross Carrying Value		Accumulated Amortization		Intangible Assets, Net		Estimated Useful Life
Developed technology	$	110,000	$	(5,696)	$	104,304	14 years
Customer relationships	90		(7)		83		10 years
Total intangible assets	$	110,090	$	(5,703)	$	104,387

ACQUISITION–RELATED CHARGES (GAINS) AND PRODUCT DISCONTINUATION, NET (Tables)

9 Months Ended

Sep. 30, 2020

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Schedule of Acquisition-related Restructuring and Discontinuation Costs

The Company’s acquisition-related restructuring and DepoCyt(e) discontinuation costs as of September 30, 2020 are summarized below (in thousands):


	Severance and Related Costs		Asset Retirement Obligations, Other Restructuring and Discontinuation Costs		Total
Balance at December 31, 2019	$	81	$	558	$	639
Charges incurred	—		(39)		(39)
Cash payments made	(81)		(500)		(581)
Balance at September 30, 2020	$	—	$	19	$	19

Cover Page - shares	9 Months Ended
Cover Page - shares	Sep. 30, 2020	Oct. 25, 2020
Cover [Abstract]
Document Type	10-Q
Document Quarterly Report	true
Document Period End Date	Sep. 30, 2020
Document Transition Report	false
Entity File Number	001-35060
Entity Registrant Name	PACIRA BIOSCIENCES, INC.
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	51-0619477
Entity Address, Address Line One	5 Sylvan Way, Suite 300
Entity Address, City or Town	Parsippany
Entity Address, State or Province	NJ
Entity Address, Postal Zip Code	07054
City Area Code	973
Local Phone Number	254-3560
Title of 12(b) Security	Common Stock, par value $0.001 per share
Trading Symbol	PCRX
Security Exchange Name	NASDAQ
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Large Accelerated Filer
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		43,443,699
Entity Central Index Key	0001396814
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2020
Document Fiscal Period Focus	Q3
Amendment Flag	false

INVENTORIES (Tables)

9 Months Ended

Sep. 30, 2020

Inventory Disclosure [Abstract]

Schedule of components of inventories

The components of inventories, net are as follows (in thousands):


	September 30,		December 31,
	2020		2019
Raw materials	$	27,614	$	20,019
Work-in-process	12,080		14,407
Finished goods	28,848		23,870
Total	$	68,542	$	58,296

STOCK PLANS

9 Months Ended

Sep. 30, 2020

Stockholders' Equity Note [Abstract]

STOCK PLANS

Stock-Based Compensation

The Company recognized stock-based compensation expense in the periods presented as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Cost of goods sold	$	1,546	$	1,243	$	4,050	$	3,490
Research and development	1,401		1,297		3,944		3,772
Selling, general and administrative	8,007		6,704		21,030		17,199
Total	$	10,954	$	9,244	$	29,024	$	24,461

Stock-based compensation from:
Stock options	$	7,181	$	6,418	$	19,795	$	16,917
Restricted stock units	3,552		2,639		8,589		6,950
Employee stock purchase plan	221		187		640		594
Total	$	10,954	$	9,244	$	29,024	$	24,461

Equity Awards

The following tables contain information about the Company’s stock option and restricted stock unit, or RSU, activity for the nine months ended September 30, 2020:


Stock Options	Number of Options	Weighted Average Exercise Price (Per Share)
Outstanding at December 31, 2019	6,706,378	$	42.80
Granted	1,470,003	47.27
Exercised	(1,129,762)	32.08
Forfeited	(403,467)	41.90
Expired	(44,177)	61.63
Outstanding at September 30, 2020	6,598,975	45.56


Restricted Stock Units	Number of Units	Weighted Average Grant Date Fair Value (Per Share)
Unvested at December 31, 2019	631,141	$	41.87
Granted	631,526	48.18
Vested	(238,060)	41.91
Forfeited	(88,308)	43.93
Unvested at September 30, 2020	936,299	45.92

The weighted average fair value of stock options granted during the nine months ended September 30, 2020 was $22.30 per share. The fair values of stock options granted were estimated using the Black-Scholes option valuation model with the following weighted average assumptions:


Black-Scholes Weighted Average Assumption						Nine Months Ended September 30, 2020
Expected dividend yield						None
Risk-free interest rate						0.55%
Expected volatility						53.48%
Expected term of options						5.36 years

Employee Stock Purchase Plan

The Company’s 2014 Employee Stock Purchase Plan, or ESPP, features two six-month offering periods per year, running from January 1 to June 30 and July 1 to December 31. Under the ESPP, employees may elect to contribute after-tax earnings to purchase shares at 85% of the closing fair market value of the Company’s common stock on either the offering date or the purchase date, whichever is less. During the nine months ended September 30, 2020, 36,668 shares were purchased and issued through the ESPP.

COMMERCIAL PARTNERS (Details) - DePuy Synthes Sales Inc - Co-Promotion Agreement $ in Millions	Jul. 31, 2020 USD ($)
Reorganizations [Abstract]
Early contract termination fee expected	$ 12.0
Fresh-Start Adjustment [Line Items]
Early contract termination fee expected	$ 12.0

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares	Sep. 30, 2020	Dec. 31, 2019
Statement of Financial Position [Abstract]
Preferred stock, par value (in dollars per share)	$ 0.001	$ 0.001
Preferred stock, shares authorized (in shares)	5,000,000	5,000,000
Preferred stock, shares issued (in shares)	0	0
Preferred stock, shares outstanding (in shares)	0	0
Common stock, par value (in dollars per share)	$ 0.001	$ 0.001
Common stock, shares authorized (in shares)	250,000,000	250,000,000
Common stock, shares issued (in shares)	43,312,638	41,908,148
Common stock, shares outstanding (in shares)	43,312,638	41,908,148

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019
Operating activities:
Net income (loss)	$ 131,008	$ (6,128)
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Reversal of deferred tax valuation allowance	124,572	0
Depreciation of fixed assets and amortization of intangible assets	14,847	14,486
Amortization of debt issuance costs	1,512	1,273
Amortization of debt discount	12,684	10,216
Loss on early extinguishment of debt	8,071	0
Loss on disposal and impairment of fixed assets	22	998
Stock-based compensation	29,024	24,461
Changes in contingent consideration (after MyoScience, Inc. acquisition)	(1,560)	7,327
(Gain) loss on investment and other non-operating income, net	(2,779)	3,957
Changes in operating assets and liabilities (net of MyoScience, Inc. acquisition):
Accounts receivable, net	1,386	(3,567)
Inventories, net	(10,246)	(9,967)
Prepaid expenses and other assets	(382)	(2,451)
Accounts payable	(1,117)	829
Accrued expenses and income taxes payable	(16,454)	4,004
Other liabilities	(1,670)	(822)
Payment of contingent consideration to MyoScience, Inc. securityholders	(9,409)	0
Net cash provided by operating activities	30,365	44,616
Investing activities:
Acquisition of MyoScience, Inc. (net of cash acquired)	0	(118,683)
Purchases of fixed assets	(23,393)	(5,662)
Purchases of investments	(326,664)	(220,091)
Sales of investments	154,767	248,365
Equity investment	0	(1,622)
Net cash used in investing activities	(195,290)	(97,693)
Financing activities:
Proceeds from exercises of stock options	35,980	4,991
Proceeds from shares issued under employee stock purchase plan	1,421	1,270
Payment of debt issuance and financing costs	(12,487)	0
Payment of contingent consideration to MyoScience, Inc. securityholders	(5,591)	0
Net cash provided by financing activities	211,941	5,690
Net increase (decrease) in cash and cash equivalents	47,016	(47,387)
Cash and cash equivalents, beginning of period	78,228	132,526
Cash and cash equivalents, end of period	125,244	85,139
Supplemental cash flow information:
Cash paid for interest	5,305	4,102
Cash paid for income taxes, net of refunds	2,329	702
Non-cash investing and financing activities:
Net increase in contingent consideration liabilities	0	28,470
Net increase in accrued fixed assets	6,423	1,663
Convertible Senior Notes Due 2025
Financing activities:
Proceeds from debt component of the 2025 convertible senior notes	314,708	0
Proceeds from equity component of the 2025 convertible senior notes	87,792	0
Convertible Senior Notes Due 2019
Financing activities:
Repayments of convertible senior notes	0	(338)
Conversion premium on the 2019 convertible senior notes	0	233
Convertible Senior Notes Due 2022
Financing activities:
Repayments of convertible senior notes	(176,793)	0
Retirement of equity component of the 2022 convertible senior notes	$ (33,089)	$ 0

STOCKHOLDERS' EQUITY (Tables)

9 Months Ended

Sep. 30, 2020

Stockholders' Equity Note [Abstract]

Schedule of accumulated other comprehensive income (loss)

The following table illustrates the changes in the balances of the Company’s accumulated other comprehensive income (loss) for the periods presented (in thousands):


	Nine Months Ended September 30,
Net unrealized gains (losses) from available-for-sale investments:	2020		2019
Balance at beginning of period	$	322	$	(280)
Other comprehensive income before reclassifications	525		727
Amounts reclassified from accumulated other comprehensive income (loss)	—		—
Balance at end of period	$	847	$	447

COMMITMENTS AND CONTINGENCIES	9 Months Ended
COMMITMENTS AND CONTINGENCIES	Sep. 30, 2020
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	COMMITMENTS AND CONTINGENCIES From time to time, the Company has been and may again become involved in legal proceedings arising in the ordinary course of its business, including those related to patents, product liability and government investigations. Except as described below, the Company is not presently a party to any legal proceedings that it believes to be material, and is not aware of any pending or threatened litigation against the Company which it believes could have a material adverse effect on its business, operating results, financial condition or cash flows. MyoScience Milestone Litigation In August 2020, the Company and its subsidiary, Pacira CryoTech, Inc. (“Pacira CryoTech”), filed a lawsuit in the Court of Chancery of the State of Delaware against Fortis Advisors LLC (“Fortis”), solely in its capacity as representative for the former securityholders of MyoScience, and certain other defendants, seeking declaratory judgment with respect to certain terms of the merger agreement for the MyoScience Acquisition (the “Merger Agreement”), specifically related to the achievement of certain milestone payments under the Merger Agreement. In addition, the Company and Pacira CryoTech sought general, special and compensatory damages against the other defendants related to breach of fiduciary duties in connection with the purported achievement of milestone payments under the Merger Agreement, and breach of the Merger Agreement and certain other agreements with the defendants. In October 2020, Fortis filed an answer and counterclaim against the Company and Pacira CryoTech seeking to recover certain milestone payments under the Merger Agreement totaling $40.0 million, and attorneys’ fees. The Company believes that the counterclaim from Fortis is without merit and intends to vigorously defend against all claims. The Company is unable to predict the outcome of this action at this time. Department of Justice Inquiry Settlement In April 2015, the Company received a subpoena from the U.S. Department of Justice, U.S. Attorney’s Office for the District of New Jersey pertaining to marketing and promotional practices related to EXPAREL. In July 2020, the Company formally entered into settlement agreements that resolved all outstanding investigations and claims by the United States Department of Justice, the United States Department of Health and Human Services, various States Attorneys’ General and a private plaintiff. This agreement concludes a five-year investigation related to the sale and marketing of EXPAREL. Under the various settlement agreements, the Company paid a global settlement of $3.5 million, which was previously recorded in acquisition-related charges, product discontinuation and other in the consolidated financial statements for the year ended December 31, 2019. The Company expressly denies all allegations and contentions and has admitted no wrongdoing in connection with the settlement agreements. The Company has been given assurances that this concludes the investigation that originated from the U.S. Department of Justice subpoena in April 2015.

LEASES (Tables)

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

Summary of operating lease cost and other operating lease information

The operating lease costs for the facilities include lease and non-lease components, such as common area maintenance and other common operating expenses, along with executory costs such as insurance and real estate taxes. Total operating lease costs are as follows (in thousands):


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Operating Lease Costs	2020		2019		2020		2019
Fixed lease costs	$	3,099	$	1,585	$	7,085	$	4,544
Variable lease costs	611		403		1,661		1,233
Total	$	3,710	$	1,988	$	8,746	$	5,777

Supplemental cash flow information related to operating leases is as follows (in thousands):


	Nine Months Ended
	September 30,
	2020		2019
Cash paid for lease ROU assets and liabilities	$	11,251	$	5,247
ROU assets recorded in exchange for lease obligations	$	42,101	$	38,419

The Company has measured its operating lease liabilities at an estimated discount rate in which it could borrow on a collateralized basis over the remaining term for each operating lease. The weighted average remaining lease term and the weighted average discount rate are summarized as follows:


						September 30, 2020
Weighted average remaining lease term						9.39 years
Weighted average discount rate						6.88%

Schedule of maturities of operating lease liabilities

Maturities of the Company’s operating lease liabilities are as follows (in thousands):


Year	Aggregate Minimum Payments Due
2020 (remaining three months)	$	4,501
2021	10,745
2022	10,423
2023	10,697
2024	10,980
2025 through 2030	62,072
Total lease payments	109,418

Less: imputed interest	(29,515)
Total operating lease liabilities	$	79,903

GOODWILL AND INTANGIBLE ASSETS

9 Months Ended

Sep. 30, 2020

Goodwill and Intangible Assets Disclosure [Abstract]

Goodwill and Intangible Assets

GOODWILL AND INTANGIBLE ASSETS

Goodwill

There was no change in the carrying value of the Company’s goodwill during the three and nine months ended September 30, 2020. The balance at both September 30, 2020 and December 31, 2019 was $99.5 million.

Skyepharma Acquisition

In March 2007, the Company acquired from SkyePharma Holding, Inc. (now a subsidiary of Vectura Group plc), or Skyepharma, its California operating subsidiary named Pacira Pharmaceuticals, Inc. (the “Skyepharma Acquisition”). The Skyepharma Acquisition was accounted for under Statement of Financial Accounting Standards 141, Accounting for Business Combinations, which was the effective GAAP standard at the Skyepharma Acquisition date. As of September 30, 2020, the Company has recorded $62.0 million of goodwill related to the Skyepharma Acquisition.

In connection with the Skyepharma Acquisition, the Company agreed to percentage and milestone payments for DepoBupivacaine products, including EXPAREL. The milestone payments are as follows:

(i) $10.0 million upon the first commercial sale in the United States (met April 2012);

(ii) $4.0 million upon the first commercial sale in the United Kingdom, France, Germany, Italy or Spain;

(iii) $8.0 million when annual net sales collected reach $100.0 million (met September 2014);

(iv) $8.0 million when annual net sales collected reach $250.0 million (met June 2016); and

(v) $32.0 million when annual net sales collected reach $500.0 million.

The two unmet milestone payments totaling $36.0 million are the only remaining obligations to Skyepharma. Any remaining milestone payments will be treated as additional costs of the Skyepharma Acquisition and, therefore, recorded as goodwill if and when each contingency is resolved. For purposes of meeting future potential milestone payments, annual net sales are measured on a rolling quarterly basis.

MyoScience Acquisition

In connection with the MyoScience Acquisition, the Company recorded goodwill totaling $37.5 million. The Company subsequently made a tax election that allows the acquired goodwill and intangible assets to be tax deductible.

Intangible Assets

MyoScience Acquisition

Intangible assets, net, consist of the developed technology and customer relationships that were acquired in the MyoScience Acquisition and are summarized as follows (in thousands):


September 30, 2020	Gross Carrying Value		Accumulated Amortization		Intangible Assets, Net		Estimated Useful Life
Developed technology	$	110,000	$	(11,590)	$	98,410	14 years
Customer relationships	90		(13)		77		10 years
Total intangible assets	$	110,090	$	(11,603)	$	98,487


December 31, 2019	Gross Carrying Value		Accumulated Amortization		Intangible Assets, Net		Estimated Useful Life
Developed technology	$	110,000	$	(5,696)	$	104,304	14 years
Customer relationships	90		(7)		83		10 years
Total intangible assets	$	110,090	$	(5,703)	$	104,387

Amortization expense on intangible assets for the three and nine months ended September 30, 2020 was $2.0 million and $5.9 million, respectively. There was $2.0 million and $3.7 million of amortization expense on intangible assets for the three and nine months ended September 30, 2019, respectively.

Assuming no changes in the gross carrying amount of these intangible assets, amortization expense on intangible assets will be $2.0 million for the remaining three months of 2020 and the future amortization expense on intangible assets will be $7.9 million annually through 2032 and $2.2 million in 2033.

COMMERCIAL PARTNERS

3 Months Ended

9 Months Ended

Sep. 30, 2019

Sep. 30, 2020

Reorganizations [Abstract]

COMMERCIAL PARTNERS

ACQUISITION–RELATED CHARGES (GAINS) AND PRODUCT DISCONTINUATION, NET

MyoScience Acquisition

DepoCyt(e) Discontinuation

Summary of Acquisition-Related Restructuring Activities and DepoCyt(e) Discontinuation Costs

The Company’s acquisition-related restructuring and DepoCyt(e) discontinuation costs as of September 30, 2020 are summarized below (in thousands):


	Severance and Related Costs		Asset Retirement Obligations, Other Restructuring and Discontinuation Costs		Total
Balance at December 31, 2019	$	81	$	558	$	639
Charges incurred	—		(39)		(39)
Cash payments made	(81)		(500)		(581)
Balance at September 30, 2020	$	—	$	19	$	19

COMMERCIAL PARTNERS

DePuy Synthes Sales, Inc.

LEASES

9 Months Ended

Sep. 30, 2020

Leases [Abstract]

LEASES

The Company leases all of its facilities, including its EXPAREL manufacturing facility in San Diego, California and its iovera° manufacturing facility in Fremont, California. These leases have remaining terms up to 9.9 years, some of which provide renewal options at the then-current market value. The Company also has a lease with Thermo Fisher Scientific Pharma Services, or Thermo Fisher (formerly Patheon UK Limited), for the use of their manufacturing facility in Swindon, England, which is embedded in agreements the Company has with Thermo Fisher. A portion of the associated monthly base fees has been allocated to the lease component based on a relative fair value basis.


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
Operating Lease Costs	2020		2019		2020		2019
Fixed lease costs	$	3,099	$	1,585	$	7,085	$	4,544
Variable lease costs	611		403		1,661		1,233
Total	$	3,710	$	1,988	$	8,746	$	5,777

Supplemental cash flow information related to operating leases is as follows (in thousands):


	Nine Months Ended
	September 30,
	2020		2019
Cash paid for lease ROU assets and liabilities	$	11,251	$	5,247
ROU assets recorded in exchange for lease obligations	$	42,101	$	38,419

The Company has elected to net the amortization of the ROU asset and the reduction of the lease liability principal in accrued expenses in the condensed consolidated statement of cash flows.


						September 30, 2020
Weighted average remaining lease term						9.39 years
Weighted average discount rate						6.88%

Maturities of the Company’s operating lease liabilities are as follows (in thousands):


Year	Aggregate Minimum Payments Due
2020 (remaining three months)	$	4,501
2021	10,745
2022	10,423
2023	10,697
2024	10,980
2025 through 2030	62,072
Total lease payments	109,418

Less: imputed interest	(29,515)
Total operating lease liabilities	$	79,903

NET INCOME (LOSS) PER SHARE

9 Months Ended

Sep. 30, 2020

Earnings Per Share [Abstract]

NET INCOME (LOSS) PER SHARE

Basic net income (loss) per share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common shares outstanding during the period. Diluted net income (loss) per common share is calculated by dividing the net income (loss) attributable to common shares by the weighted average number of common shares outstanding plus dilutive potential common shares outstanding during the period.

Potential common shares include the shares of common stock issuable upon the exercise of outstanding stock options, the vesting of RSUs, the purchase of shares from the ESPP (using the treasury stock method) and the conversion of the excess conversion value on the 2022 Notes and 2025 Notes. As discussed in Note 9, Debt, the Company has the option to pay cash for the aggregate principal amount due upon the conversion of its 2022 Notes and 2025 Notes. Since it is the Company’s intent to settle the principal amount of its 2022 Notes and 2025 Notes in cash, the potentially dilutive effect of such notes on net income (loss) per share is computed under the treasury stock method.

Potential common shares are excluded from the diluted net income (loss) per share computation to the extent they would be antidilutive. Because the Company reported a net loss for the three and nine months ended September 30, 2019, no potentially dilutive securities have been included in the computation of diluted net loss per share for those periods.


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Numerator:
Net income (loss)	$	130,119	$	(6,087)	$	131,008	$	(6,128)







Denominator:
Weighted average common shares outstanding—basic	42,928		41,645		42,393		41,423
Computation of diluted securities:
Dilutive effect of stock options	1,086		—		740		—
Dilutive effect of RSUs	261		—		200		—



Weighted average common shares outstanding—diluted	44,275		41,645		43,333		41,423
Net income (loss) per share:
Basic net income (loss) per common share	$	3.03	$	(0.15)	$	3.09	$	(0.15)
Diluted net income (loss) per common share	$	2.94	$	(0.15)	$	3.02	$	(0.15)

The following outstanding stock options, RSUs and ESPP purchase options are antidilutive in the periods presented (in thousands):


	Three Months Ended September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
Weighted average number of stock options	3,585	5,443	4,746	4,816
Weighted average number of RSUs	5	266	126	154

Weighted average ESPP purchase options	25	33	22	23

Total	3,615	5,742	4,894	4,993

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Revenues:
Total revenues	$ 117,484	$ 104,685	$ 298,673	$ 298,602
Operating expenses:
Cost of goods sold	29,993	22,304	82,031	74,809
Research and development	14,651	20,255	44,090	52,466
Selling, general and administrative	52,561	50,128	140,683	146,559
Amortization of acquired intangible assets	1,967	1,967	5,900	3,736
Acquisition-related charges (gains) and product discontinuation, net	692	7,618	(1,599)	12,266
Total operating expenses	99,864	102,272	271,105	289,836
Income from operations	17,620	2,413	27,568	8,766
Other (expense) income:
Interest income	1,025	1,736	3,936	5,709
Interest expense	(7,132)	(5,940)	(18,609)	(17,631)
Loss on early extinguishment of debt	(8,071)	0	(8,071)	0
Other, net	2,708	(4,025)	2,571	(4,051)
Total other expense, net	(11,470)	(8,229)	(20,173)	(15,973)
Income (loss) before income taxes	6,150	(5,816)	7,395	(7,207)
Income tax benefit (expense)	123,969	(271)	123,613	1,079
Net income (loss)	$ 130,119	$ (6,087)	$ 131,008	$ (6,128)
Net income (loss) per share:
Basic net income (loss) per common share (in USD per share)	$ 3.03	$ (0.15)	$ 3.09	$ (0.15)
Diluted net income (loss) per common share (in USD per share)	$ 2.94	$ (0.15)	$ 3.02	$ (0.15)
Weighted average common shares outstanding:
Basic (in shares)	42,928	41,645	42,393	41,423
Diluted (in shares)	44,275	41,645	43,333	41,423
Product
Revenues:
Total revenues	$ 116,889	$ 104,350	$ 296,850	$ 297,080
Royalty
Revenues:
Total revenues	$ 595	$ 335	$ 1,823	$ 1,522

DEBT - Schedule of Interest Expense (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Debt Disclosure [Abstract]
Contractual interest expense	$ 1,764	$ 2,048	$ 5,861	$ 6,146
Amortization of debt issuance costs	629	429	1,512	1,273
Amortization of debt discount	5,430	3,467	12,684	10,216
Capitalized interest and other (Note 6)	(691)	(4)	(1,448)	(4)
Total	$ 7,132	$ 5,940	$ 18,609	$ 17,631
Effective interest rate on convertible senior notes	6.78%	7.81%	7.35%	7.81%

ACQUISITION–RELATED CHARGES (GAINS) AND PRODUCT DISCONTINUATION, NET - DepoCyte Product Discontinuance (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
DepoCyte Discontinuation [Roll Forward]
Total, Charges Incurred	$ 692	$ 7,618	$ (1,599)	$ 12,266
DepoCyte
DepoCyte Discontinuation [Roll Forward]
Acquisition-Related Separation Costs, Beginning Balance			81
Acquisition-Related Separation Costs, Charges Incurred			0
Acquisition-Related Separation Costs, Cash Payments Made			(81)
Acquisition-Related Separation Costs, Ending Balance	0		0
Asset Retirement Obligations, Other Restructuring and Discontinuation Costs, Beginning Balance			558
Asset Retirement Obligations, Other Restructuring and Discontinuation Costs, Charges Incurred			(39)
Asset Retirement Obligations, Other Restructuring and Discontinuation Costs, Cash Payments Made			(500)
Asset Retirement Obligations, Other Restructuring and Discontinuation Costs, Ending Balance	19		19
Total, Beginning Balance			639
Total, Charges Incurred			(39)
Total, Cash Payments Made			(581)
Total, Ending Balance	$ 19		$ 19

NET INCOME (LOSS) PER SHARE - Schedule of Antidilutive Securities (Details) - shares shares in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
EARNINGS PER SHARE
Total	3,615	5,742	4,894	4,993
Employee Stock Option
EARNINGS PER SHARE
Total	3,585	5,443	4,746	4,816
Restricted Stock Units (RSUs)
EARNINGS PER SHARE
Total	5	266	126	154
Employee Stock
EARNINGS PER SHARE
Total	25	33	22	23

FINANCIAL INSTRUMENTS

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

FINANCIAL INSTRUMENTS

Fair Value Measurements

Fair value is defined as the price that would be received to sell an asset or be paid to transfer a liability in the principal or most advantageous market in an orderly transaction. To increase consistency and comparability in fair value measurements, the FASB established a three-level hierarchy which requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. The three levels of fair value measurements are:

•Level 1—Quoted prices (unadjusted) in active markets that are accessible at the measurement date for assets or liabilities. The fair value hierarchy gives the highest priority to Level 1 inputs.

•Level 2—Observable prices that are based on inputs not quoted on active markets, but corroborated by market data.

•Level 3—Unobservable inputs that are used when little or no market data is available. The fair value hierarchy gives the lowest priority to Level 3 inputs.

The carrying value of financial instruments including cash and cash equivalents, accounts receivable and accounts payable approximate their respective fair values due to the short-term nature of these items. The fair value of the Company’s equity investment is calculated utilizing market quotations from a major American stock exchange (Level 1). The fair value of the Company’s convertible senior notes are calculated utilizing market quotations from an over-the-counter trading market for these notes (Level 2). The fair value of the Company’s acquisition-related contingent consideration is reported at fair value on a recurring basis (Level 3). The carrying values and fair values of the Company’s financial assets and liabilities at September 30, 2020 are as follows (in thousands):


	Carrying Value			Fair Value Measurements Using
				Level 1		Level 2		Level 3
Financial Assets:
Equity investment (3)	$	12,803		$	12,803	$	—	$	—
Financial Liabilities:

2.375% convertible senior notes due 2022 (1)	$	147,683	(2)	$	—	$	183,800	$	—
0.750% convertible senior notes due 2025 (1)	$	308,781	(2)	$	—	$	441,241	$	—
Acquisition-related contingent consideration (3)	$	21,582		$	—	$	—	$	21,582

(1) The closing price of the Company’s common stock as reported on the Nasdaq Global Select Market was $60.12 per share on September 30, 2020 compared to a conversion price of $66.89 per share for the 2022 Notes and $71.78 per share for the 2025 Notes. Therefore, at September 30, 2020, the conversion price was above the stock price. The maximum conversion premium that could have been due on the 2022 Notes and 2025 Notes at September 30, 2020 was approximately 2.4 million and 5.6 million shares, respectively, of the Company’s common stock. These figures assume no increases in the conversion rate for certain corporate events.

(2) Reported at historical cost.

(3) Reported at fair value on a recurring basis.

Certain assets and liabilities are measured at fair value on a non-recurring basis, including assets and liabilities acquired in a business combination and long-lived assets, which would be recognized at fair value if deemed impaired or if reclassified as assets held for sale. The fair value in these instances would be determined using Level 3 inputs.

Financial Liabilities Measured at Fair Value on a Recurring Basis

The Company has recognized contingent consideration related to the MyoScience Acquisition in the amount of $21.6 million as of September 30, 2020. Refer to Note 4, MyoScience Acquisition and Note 15, Acquisition-Related Charges and Product Discontinuation, Net, for more information.

The Company’s contingent consideration obligations are recorded at their estimated fair values and are revalued each reporting period if and until the related contingencies are resolved. The Company has, in the three and nine month periods ended September 30, 2020, recognized $0.8 million of charges and $1.6 million of gains, respectively, related to contingent consideration as a result of revisions to the probabilities of regulatory milestones being met, which have been included in acquisition-related charges (gains) in the condensed consolidated statements of operations. The Company has measured the fair value of its contingent consideration using a probability-weighted discounted cash flow approach that is based on unobservable

inputs and a Monte Carlo simulation. These inputs include, as applicable, estimated probabilities and the timing of achieving specified commercial and regulatory milestones, estimated forecasts of revenue and costs and discount rates used to calculate the present value of estimated future payments. Significant changes may increase or decrease the probabilities of achieving the related commercial and regulatory events, shorten or lengthen the time required to achieve such events, or increase or decrease estimated forecasts. At September 30, 2020, the weighted average discount rate was 6.09% and the weighted average probability of success for regulatory milestones was 25.2%. There were $7.3 million in changes in the fair value of contingent consideration in the three and nine months ended September 30, 2019.

The following table includes the key assumptions used in the valuation of the Company’s contingent consideration:


Assumption						Ranges Utilized as of September 30, 2020
Discount rates						6.04% to 6.15%
Probabilities of payment for regulatory milestones						3% to 100%
Projected years of payment for regulatory and commercial milestones						2021 to 2023

The maximum remaining potential payments related to the contingent consideration from the MyoScience Acquisition are $58.0 million as of September 30, 2020.

The change in the Company’s contingent consideration recorded at fair value using Level 3 measurements is as follows (in thousands):


	Contingent Consideration Fair Value
Balance at December 31, 2019	$	38,142

Fair value adjustments and accretion	(1,560)
Payments made	(15,000)
Balance at September 30, 2020	$	21,582

Investments

Short-term investments consist of asset-backed securities collateralized by credit card receivables, investment grade commercial paper and corporate bonds with maturities greater than three months, but less than one year. Long-term investments consist of asset-backed securities collateralized by credit card receivables and corporate bonds with maturities greater than one year but less than three years. Net unrealized gains and losses (excluding credit losses, if any) from the Company’s short-term and long-term investments are reported in other comprehensive income (loss). At September 30, 2020, all of the Company’s short-term and long-term investments are classified as available-for-sale investments and are determined to be Level 2 instruments, which are measured at fair value using standard industry models with observable inputs. The fair value of the commercial paper is measured based on a standard industry model that uses the three-month U.S. Treasury bill rate as an observable input. The fair value of the asset-backed securities and corporate bonds is principally measured or corroborated by trade data for identical issues in which related trading activity is not sufficiently frequent to be considered a Level 1 input or that of comparable securities. At the time of purchase, all short-term and long-term investments had an “A” or better rating by Standard & Poor’s.

The following summarizes the Company’s investments at September 30, 2020 and December 31, 2019 (in thousands):


September 30, 2020 Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value (Level 2)
Short-term:
Asset-backed securities	$	57,729	$	259	$	—	$	57,988
Commercial paper	137,298		41		—		137,339
Corporate bonds	158,368		550		(6)		158,912
U.S. Treasury notes	52,642		2		(2)		52,642
Subtotal	406,037		852		(8)		406,881
Long-term:


U.S. Treasury notes	44,059		6		(3)		44,062
Subtotal	44,059		6		(3)		44,062
Total	$	450,096	$	858	$	(11)	$	450,943


December 31, 2019 Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value (Level 2)
Short-term:
Asset-backed securities	$	43,166	$	54	$	—	$	43,220
Commercial paper	32,250		20		—		32,270
Corporate bonds	138,012		225		(5)		138,232
Subtotal	213,428		299		(5)		213,722
Long-term:
Asset-backed securities	28,064		10		(15)		28,059
Corporate bonds	36,706		37		(4)		36,739
Subtotal	64,770		47		(19)		64,798
Total	$	278,198	$	346	$	(24)	$	278,520

At September 30, 2020, there were no investments held for sale that were materially less than their amortized cost.

The Company elects to recognize its interest receivable separate from its available-for-sale investments. At September 30, 2020 and December 31, 2019, the interest receivable recognized in prepaid expenses and other current assets was $1.6 million and $1.4 million, respectively.

Equity Investment

At September 30, 2020 and December 31, 2019, the Company held an equity investment in TELA Bio, Inc., or TELA Bio, in its condensed consolidated balance sheets in the amount of $12.8 million and $10.0 million, respectively. The Company records its investment in TELA Bio at fair value based on a quoted market price based on Level 1 inputs, which resulted in an unrealized gain in the amount of $2.8 million during both the three and nine months ended September 30, 2020, which are recorded in other, net income (expense) in the condensed consolidated statements of operations.

Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of cash and cash equivalents, short-term investments, long-term investments and accounts receivable. The Company maintains its cash and cash equivalents with high-credit quality financial institutions. Such amounts may exceed federally-insured limits.

As of September 30, 2020, three wholesalers each accounted for over 10% of the Company’s accounts receivable, at 33%, 28% and 27%. At December 31, 2019, three wholesalers each accounted for over 10% of the Company’s accounts receivable, at 37%, 29% and 26%. For additional information regarding the Company’s wholesalers, see Note 2, Summary of Significant Accounting Policies. EXPAREL revenues are primarily derived from major wholesalers and pharmaceutical companies that generally have significant cash resources. The Company performs ongoing credit evaluations of its customers as

warranted and generally does not require collateral. Allowances for credit losses on the Company’s accounts receivable are maintained based on historical payment patterns, current and estimated future economic conditions, aging of accounts receivable and its write-off history. As of September 30, 2020 and December 31, 2019, the Company did not deem any allowances for credit losses on its accounts receivable necessary.

FINANCIAL INSTRUMENTS - Fair Value of Liabilities Measured on a Recurring Basis (Details) - USD ($) $ / shares in Units, $ in Thousands, shares in Millions	Mar. 13, 2017	Sep. 30, 2020	Jul. 10, 2020	Jul. 07, 2020	Mar. 07, 2017
Fair Value Measurements
Closing sale price (in dollars per share)		$ 60.12
Myoscience Acquisition
Fair Value Measurements
Acquisition-related contingent consideration		$ 21,600
Convertible Senior Notes Due 2022
Fair Value Measurements
Closing sale price (in dollars per share)					$ 48.65
Initial conversion price of notes into common stock (in dollars per share)	$ 66.89
Convertible Senior Notes Due 2022 \| Unsecured Debt
Fair Value Measurements
Stated interest rate (as a percent)	2.375%	2.375%	2.375%
Convertible Senior Notes Due 2022 \| Maximum
Fair Value Measurements
Debt instrument, convertible, conversion premium (in shares)	2.4
Convertible Senior Notes Due 2025
Fair Value Measurements
Closing sale price (in dollars per share)				$ 54.17
Initial conversion price of notes into common stock (in dollars per share)	$ 71.78			$ 71.78
Convertible Senior Notes Due 2025 \| Unsecured Debt
Fair Value Measurements
Stated interest rate (as a percent)		0.75%	0.75%
Convertible Senior Notes Due 2025 \| Maximum
Fair Value Measurements
Debt instrument, convertible, conversion premium (in shares)	5.6
Level 1
Fair Value Measurements
Equity Investments		$ 12,803
Level 1 \| Myoscience Acquisition
Fair Value Measurements
Acquisition-related contingent consideration		0
Level 1 \| Convertible Senior Notes Due 2022
Fair Value Measurements
Convertible senior notes		0
Level 1 \| Convertible Senior Notes Due 2025
Fair Value Measurements
Convertible senior notes		0
Level 2
Fair Value Measurements
Equity Investments		0
Level 2 \| Myoscience Acquisition
Fair Value Measurements
Acquisition-related contingent consideration		0
Level 2 \| Convertible Senior Notes Due 2022
Fair Value Measurements
Convertible senior notes		183,800
Level 2 \| Convertible Senior Notes Due 2025
Fair Value Measurements
Convertible senior notes		441,241
Level 3
Fair Value Measurements
Equity Investments		0
Level 3 \| Myoscience Acquisition
Fair Value Measurements
Acquisition-related contingent consideration		21,582
Level 3 \| Convertible Senior Notes Due 2022
Fair Value Measurements
Convertible senior notes		0
Level 3 \| Convertible Senior Notes Due 2025
Fair Value Measurements
Convertible senior notes		0
Reported Value Measurement
Fair Value Measurements
Equity Investments		12,803
Reported Value Measurement \| Myoscience Acquisition
Fair Value Measurements
Acquisition-related contingent consideration		21,582
Reported Value Measurement \| Convertible Senior Notes Due 2022
Fair Value Measurements
Convertible senior notes		147,683
Reported Value Measurement \| Convertible Senior Notes Due 2025
Fair Value Measurements
Convertible senior notes		$ 308,781

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Schedule of percentage of revenue comprised by the three largest customers (i.e. wholesalers or commercial partners)

The table below includes the percentage of revenues comprised by the Company’s three largest wholesalers in each period presented:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
Largest wholesaler	31%	34%	31%	34%
Second largest wholesaler	30%	29%	31%	29%
Third largest wholesaler	25%	27%	25%	26%
Total	86%	90%	87%	89%

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Parenthetical) - USD ($) $ in Thousands	3 Months Ended	9 Months Ended
	Sep. 30, 2020	Sep. 30, 2020
Statement of Cash Flows [Abstract]
Deferred tax associated with equity component of convertible debt	$ 20,450	$ 20,450

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation and Principles of Consolidation

These interim condensed consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America, or GAAP, and in accordance with the rules and regulations of the United States Securities and Exchange Commission (SEC), for interim reporting. Pursuant to these rules and regulations, certain information and footnote disclosures normally included in complete annual financial statements have been condensed or omitted. Therefore, these interim condensed consolidated financial statements should be read in conjunction with the audited annual consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019.

The condensed consolidated financial statements at September 30, 2020, and for the three and nine-month periods ended September 30, 2020 and 2019, are unaudited, but include all adjustments (consisting of only normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the financial information set forth herein in accordance with GAAP. The condensed consolidated balance sheet at December 31, 2019 is derived from the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2019. The condensed consolidated financial statements as presented reflect certain reclassifications from previously issued financial

statements to conform to the current year presentation. The accounts of wholly-owned subsidiaries are included in the condensed consolidated financial statements. Intercompany accounts and transactions have been eliminated in consolidation.

The results of operations for these interim periods are not necessarily indicative of results that may be expected for any other interim periods or for the full year.

Concentration of Major Customers

The Company sells EXPAREL through a drop-ship program under which orders are processed through wholesalers (including AmerisourceBergen Health Corporation, Cardinal Health, Inc. and McKesson Drug Company), but shipments of the product are sent directly to individual accounts, such as hospitals, ambulatory surgery centers and individual doctors. The Company also sells EXPAREL directly to ambulatory surgery centers and physicians. The Company sells its bupivacaine liposome injectable suspension for veterinary use to a third-party licensee and sells iovera° directly to end users. The table below includes the percentage of revenues comprised by the Company’s three largest wholesalers in each period presented:


	Three Months Ended September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
Largest wholesaler	31%	34%	31%	34%
Second largest wholesaler	30%	29%	31%	29%
Third largest wholesaler	25%	27%	25%	26%
Total	86%	90%	87%	89%

Recently Adopted Accounting Pronouncements

In February 2016, the Financial Accounting Standards Board, or FASB, issued Accounting Standards Update, or ASU, 2016-02, Leases (Topic 842), which was adopted by the Company on January 1, 2019 using the effective date method. The Company recorded $36.5 million of lease liabilities and $27.6 million of right-of-use, or ROU, assets as of January 1, 2019, the difference representing previously recorded lease-related assets and liabilities. There was a cumulative-effect adjustment to retained earnings of $0.2 million upon adoption.

In June 2016, the FASB issued ASU 2016-13, Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions and reasonable and supportable forecasts. The Company now includes forward-looking information to better form its credit loss estimates. This update also required enhanced disclosures to help financial statement users better understand significant estimates and judgments used in estimating credit losses, as well as the credit quality and underwriting standards of an entity’s portfolio. This standard became effective for the Company beginning January 1, 2020 and there were no credit losses recognized upon adoption.

In August 2018, the FASB issued ASU 2018-13, Fair Value Measurement (Topic 820): Disclosure Framework. The update added the following disclosures: (i) changes in unrealized gains and losses for the period included in other comprehensive income (loss) for recurring Level 3 fair value measurements held at the end of the reporting period and (ii) the range and weighted average of significant unobservable inputs used to develop Level 3 fair value measurements. The standard became effective for the Company beginning January 1, 2020 and the Company has applied these new disclosure requirements in its condensed consolidated financial statements as of and for the three and nine months ended September 30, 2020.

In August 2018, the FASB issued ASU 2018-15, Intangibles—Goodwill and Other Internal-Use Software (Subtopic 350-40): Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract, which aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal-use software. The update provides guidance to determine which implementation costs to capitalize as they relate to the service contract and which costs to expense. Any expense related to the capitalized implementation costs should be recorded in the same financial statement line item in the consolidated statements of operations as the fees associated with the hosting element of the arrangement, and the payments for capitalized implementation costs should be classified in the same manner as payments made for fees associated with the hosting element in the consolidated statements of cash flows. This standard became effective for the Company beginning January 1, 2020. The amendments are to be applied prospectively to all implementation costs incurred

after the date of adoption. The Company did not incur any implementation costs in a hosting arrangement during the three and nine months ended September 30, 2020.

Recent Accounting Pronouncements Not Adopted as of September 30, 2020

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740), Simplifying the Accounting for Income Taxes, which amends the approaches and methodologies in accounting for income taxes during interim periods and makes changes to certain income tax classifications. The new standard allows certain exceptions, including an exception to the use of the incremental approach for intra-period tax allocations, when there is a loss from continuing operations and income or a gain from other items, and to the general methodology for calculating income taxes in an interim period, when a year-to-date loss exceeds the anticipated loss for the year. The standard also requires franchise or similar taxes partially based on income to be reported as income tax and to reflect the effects of enacted changes in tax laws or rates in the annual effective tax rate computation from the date of enactment. Lastly, in any future acquisition, the Company would be required to evaluate when the step-up in the tax basis of goodwill is part of the business combination and when it should be considered a separate transaction. The standard will be effective for the Company beginning January 1, 2021, with early adoption of the amendments permitted. The Company is evaluating the impact from the adoption of ASU 2019-12 on its consolidated financial statements.

In August 2020, the FASB issued ASU 2020-06, Debt—Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging—Contracts in Entity’s Own Equity (Subtopic 815-40), which limits the number of convertible instruments that require separate accounting to (i) those with embedded conversion features that are not clearly and closely related to the debt, that meet the definition of a derivative, and that do not qualify for the scope exception from derivative accounting and (ii) convertible debt instruments issued with substantial premiums for which the premiums are recorded as paid-in capital. In addition, the new guidance requires diluted EPS calculations to be prepared using the if-converted method, instead of the treasury stock method. The guidance must be applied in fiscal years beginning after December 15, 2021, including interim periods within those fiscal years, with early adoption permitted no earlier than for fiscal years beginning after December 15, 2020. The Company has the option to adopt the new guidance using a modified retrospective method of transition, which would then be applied to transactions outstanding at the time of adoption, or the full retrospective method. The Company is evaluating the impact from the adoption of ASU 2020-06 on its consolidated financial statements.

FINANCIAL INSTRUMENTS - Narrative (Details)	3 Months Ended		9 Months Ended		12 Months Ended
FINANCIAL INSTRUMENTS - Narrative (Details)	Sep. 30, 2020 USD ($)	Sep. 30, 2019 USD ($)	Sep. 30, 2020 USD ($) customer	Sep. 30, 2019 USD ($)	Dec. 31, 2019 USD ($) customer
Concentration Risk [Line Items]
Changes in contingent consideration (after MyoScience, Inc. acquisition)		$ 7,300,000	$ (1,560,000)	$ 7,327,000
Interest receivable	$ 1,600,000		1,600,000		$ 1,400,000
Investment in TELA Bio, Inc	12,800,000		12,800,000		$ 10,000,000.0
Unrealized gain on equity method investment	2,800,000		$ 2,800,000
Number of Major Customers \| customer			3		3
Amount of allowance for doubtful accounts	0		$ 0		$ 0
Accounts receivable \| Credit risk \| Major customer one
Concentration Risk [Line Items]
Concentration risk (as a percent)			33.00%		37.00%
Accounts receivable \| Credit risk \| Major customer two
Concentration Risk [Line Items]
Concentration risk (as a percent)			28.00%		29.00%
Accounts receivable \| Credit risk \| Major customer three
Concentration Risk [Line Items]
Concentration risk (as a percent)			27.00%		26.00%
Myoscience Acquisition
Concentration Risk [Line Items]
Acquisition-related contingent consideration	21,600,000		$ 21,600,000
Change in fair value of the contingent consideration since acquisition	800,000		1,600,000
Myoscience Acquisition \| Level 3
Concentration Risk [Line Items]
Acquisition-related contingent consideration	$ 21,582,000		$ 21,582,000
Contingent Consideration \| Myoscience Acquisition \| Measurement Input, Discount Rate \| Level 3
Concentration Risk [Line Items]
Measurement input, contingent consideration	0.0609		0.0609
Contingent Consideration \| Myoscience Acquisition \| Measurement Input, Expected Milestone Payment \| Level 3
Concentration Risk [Line Items]
Measurement input, contingent consideration	0.252		0.252

REVENUE (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
REVENUE (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Disaggregation of Revenue [Line Items]
Total net product sales	$ 116,889	$ 104,350	$ 296,850	$ 297,080
EXPAREL / bupivacaine liposome injectable suspension
Disaggregation of Revenue [Line Items]
Total net product sales	114,163	101,711	290,459	292,406
iovera°
Disaggregation of Revenue [Line Items]
Total net product sales	$ 2,726	$ 2,639	$ 6,391	$ 4,674
Minimum
Disaggregation of Revenue [Line Items]
Accounts receivable, payment terms			0 days
Maximum
Disaggregation of Revenue [Line Items]
Accounts receivable, payment terms			37 days

- Definition

Amount, excluding tax collected from customer, of revenue from satisfaction of performance obligation by transferring promised good or service to customer. Tax collected from customer is tax assessed by governmental authority that is both imposed on and concurrent with specific revenue-producing transaction, including, but not limited to, sales, use, value added and excise.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 30
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8906-108599

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 40
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9031-108599

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 41
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9038-108599

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 32
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8933-108599

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 4
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130543-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 22
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e8736-108599

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 42
-URI http://asc.fasb.org/extlink&oid=120311839&loc=d3e9054-108599

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 5
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130545-203045

Reference 11: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 924
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB Topic 11.L)
-URI http://asc.fasb.org/extlink&oid=6472922&loc=d3e499488-122856

+ Details

REVENUE (Tables)

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

Disaggregated Revenue

The following table represents disaggregated net product sales in the periods presented as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net product sales:
EXPAREL / bupivacaine liposome injectable suspension	$	114,163	$	101,711	$	290,459	$	292,406
iovera°	2,726		2,639		6,391		4,674
Total net product sales	$	116,889	$	104,350	$	296,850	$	297,080

DEBT - Schedule of Debt (Details) - Unsecured Debt - USD ($) $ in Thousands	Jul. 10, 2020	Sep. 30, 2020	Dec. 31, 2019	Mar. 13, 2017
Convertible Senior Notes Due 2022
Debt Instrument [Line Items]
Stated interest rate (as a percent)	2.375%	2.375%		2.375%
Convertible senior notes, gross		$ 160,000	$ 345,000
Deferred financing costs		(1,299)	(4,143)
Discount on debt		(11,018)	(34,812)
Total debt, net of debt discount and deferred financing costs		$ 147,683	306,045
Repayments of debt	$ 211,100
Convertible Senior Notes Due 2025
Debt Instrument [Line Items]
Stated interest rate (as a percent)	0.75%	0.75%
Convertible senior notes, gross		$ 402,500	0
Deferred financing costs		(9,373)	0
Discount on debt		(84,346)	0
Total debt, net of debt discount and deferred financing costs		$ 308,781	$ 0

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

9 Months Ended

Sep. 30, 2020

Accounting Policies [Abstract]

Basis of Presentation and Principles of Consolidation

The results of operations for these interim periods are not necessarily indicative of results that may be expected for any other interim periods or for the full year.

Concentration of Major Customers


	Three Months Ended September 30,		Nine Months Ended September 30,
	2020	2019	2020	2019
Largest wholesaler	31%	34%	31%	34%
Second largest wholesaler	30%	29%	31%	29%
Third largest wholesaler	25%	27%	25%	26%
Total	86%	90%	87%	89%

Recent Accounting Pronouncements

Recently Adopted Accounting Pronouncements

after the date of adoption. The Company did not incur any implementation costs in a hosting arrangement during the three and nine months ended September 30, 2020.

Recent Accounting Pronouncements Not Adopted as of September 30, 2020

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - USD ($) $ in Thousands	Total	Convertible Senior Notes Due 2022	Convertible Senior Notes Due 2025	Convertible Senior Notes Due 2019	Cumulative Effect, Period of Adoption, Adjustment	Common Stock	Additional Paid-In Capital	Additional Paid-In Capital Convertible Senior Notes Due 2022	Additional Paid-In Capital Convertible Senior Notes Due 2025	Additional Paid-In Capital Convertible Senior Notes Due 2019	Accumulated Deficit	Accumulated Deficit Cumulative Effect, Period of Adoption, Adjustment	Accumulated Other Comprehensive Income (Loss)
Balances (in shares) at Dec. 31, 2018						41,223,000
Balance at beginning of period at Dec. 31, 2018	$ 321,226				$ (156)	$ 41	$ 709,691				$ (388,226)	$ (156)	$ (280)
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)						251,000
Exercise of stock options	4,995					$ 1	4,994
Vested restricted stock units (in shares)						190,000
Vested restricted stock units	0					$ 0
Shares issued under employee stock purchase plan (shares)						36,000
Shares issued under employee stock purchase plan	1,270						1,270
Stock-based compensation	24,461						24,461
Equity component of convertible notes issued and retired				$ (233)						$ (233)
Net unrealized gain (loss) on investments	727												727
Net Income (Loss) Attributable to Parent	(6,128)										(6,128)
Balances (in shares) at Sep. 30, 2019						41,700,000
Balance at end of period at Sep. 30, 2019	$ 346,162					$ 42	740,183				(394,510)		447
Increase (Decrease) in Stockholders' Equity
Accounting Standards Update [Extensible List]	us-gaap:AccountingStandardsUpdate201602Member
Balances (in shares) at Jun. 30, 2019						41,606,000
Balance at beginning of period at Jun. 30, 2019	$ 341,650					$ 42	729,531				(388,423)		500
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)						92,000
Exercise of stock options	1,408						1,408
Vested restricted stock units (in shares)						2,000
Vested restricted stock units	0
Stock-based compensation	9,244						9,244
Net unrealized gain (loss) on investments	(53)												(53)
Net Income (Loss) Attributable to Parent	(6,087)										(6,087)
Balances (in shares) at Sep. 30, 2019						41,700,000
Balance at end of period at Sep. 30, 2019	346,162					$ 42	740,183				(394,510)		447
Balances (in shares) at Dec. 31, 2019						41,908,000
Balance at beginning of period at Dec. 31, 2019	$ 354,944					$ 42	753,978				(399,398)		322
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)	1,129,762					1,130,000
Exercise of stock options	$ 36,238					$ 1	36,237
Vested restricted stock units (in shares)						238,000
Vested restricted stock units	$ 0
Shares issued under employee stock purchase plan (shares)	36,668					37,000
Shares issued under employee stock purchase plan	$ 1,421						1,421
Stock-based compensation	29,024						29,024
Equity component of convertible notes issued and retired		$ (33,089)	$ 64,619					$ (33,089)	$ 64,619
Net unrealized gain (loss) on investments	525												525
Net Income (Loss) Attributable to Parent	131,008										131,008
Balances (in shares) at Sep. 30, 2020						43,313,000
Balance at end of period at Sep. 30, 2020	584,690					$ 43	852,190				(268,390)		847
Balances (in shares) at Jun. 30, 2020						42,608,000
Balance at beginning of period at Jun. 30, 2020	388,148					$ 43	785,124				(398,509)		1,490
Increase (Decrease) in Stockholders' Equity
Exercise of stock options (in shares)						703,000
Exercise of stock options	24,582					$ 0	24,582
Vested restricted stock units (in shares)						2,000
Vested restricted stock units	0
Stock-based compensation	10,954						10,954
Equity component of convertible notes issued and retired		$ (33,089)	$ 64,619					$ (33,089)	$ 64,619
Net unrealized gain (loss) on investments	(643)												(643)
Net Income (Loss) Attributable to Parent	130,119										130,119
Balances (in shares) at Sep. 30, 2020						43,313,000
Balance at end of period at Sep. 30, 2020	$ 584,690					$ 43	$ 852,190				$ (268,390)		$ 847

INCOME TAXES (Tables)

9 Months Ended

Sep. 30, 2020

Income Tax Disclosure [Abstract]

Schedule of Income before Income Tax, Domestic and Foreign

Income (loss) before income taxes and total income tax (benefit) expense is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Income (loss) before income taxes:
Domestic	$	8,175	$	(3,205)	$	10,154	$	(2,183)
Foreign	(2,025)		(2,611)		(2,759)		(5,024)
Total income (loss) before income taxes	$	6,150	$	(5,816)	$	7,395	$	(7,207)

Current taxes:
Federal	$	—	$	—	$	—	$	—
State	603		271		959		749

Total current taxes	$	603	$	271	$	959	$	749
Deferred taxes:
Federal	$	(104,389)	$	—	$	(104,389)	$	(1,828)
State	(20,183)		—		(20,183)		—

Total deferred taxes	$	(124,572)	$	—	$	(124,572)	$	(1,828)

Total income tax (benefit) expense	$	(123,969)	$	271	$	(123,613)	$	(1,079)

Schedule of Components of Income Tax Expense (Benefit)

Income (loss) before income taxes and total income tax (benefit) expense is as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Income (loss) before income taxes:
Domestic	$	8,175	$	(3,205)	$	10,154	$	(2,183)
Foreign	(2,025)		(2,611)		(2,759)		(5,024)
Total income (loss) before income taxes	$	6,150	$	(5,816)	$	7,395	$	(7,207)

Current taxes:
Federal	$	—	$	—	$	—	$	—
State	603		271		959		749

Total current taxes	$	603	$	271	$	959	$	749
Deferred taxes:
Federal	$	(104,389)	$	—	$	(104,389)	$	(1,828)
State	(20,183)		—		(20,183)		—

Total deferred taxes	$	(124,572)	$	—	$	(124,572)	$	(1,828)

Total income tax (benefit) expense	$	(123,969)	$	271	$	(123,613)	$	(1,079)

Schedule of Deferred Tax Assets and Liabilities

The significant components of the Company’s deferred tax assets and liabilities at September 30, 2020 and December 31, 2019 are as follows (in thousands):


	September 30,		December 31,
	2020		2019
Deferred tax assets:
Net operating loss carryforwards	$	66,262	$	68,921
Federal and state credits	17,197		16,895
Depreciation and amortization	16,203		15,778
Accruals and reserves	8,043		8,767

Stock based compensation	22,315		23,187
Inventory	1,671		1,646
Other	1,257		2,022
Total deferred tax assets	132,948		137,216
Deferred tax liabilities:
Discount on convertible senior notes	(22,215)		(8,125)
Deferred tax assets, net of deferred tax liabilities	110,733		129,091
Less: valuation allowance	(6,611)		(129,091)
Net deferred tax assets	$	104,122	$	—

FIXED ASSETS (Tables)

9 Months Ended

Sep. 30, 2020

Property, Plant and Equipment [Abstract]

Schedule of fixed assets summarized by major category

Fixed assets, net, summarized by major category, consist of the following (in thousands):


	September 30,		December 31,
	2020		2019
Machinery and equipment	$	75,489	$	70,078
Leasehold improvements	60,915		60,441
Computer equipment and software	11,178		8,942
Office furniture and equipment	2,242		1,882
Construction in progress	59,990		38,778
Total	209,814		180,121
Less: accumulated depreciation	(84,287)		(75,440)
Fixed assets, net	$	125,527	$	104,681

DESCRIPTION OF BUSINESS (Details)	9 Months Ended
DESCRIPTION OF BUSINESS (Details)	Sep. 30, 2020 productLine segment
Concentration Risk [Line Items]
Number of reportable segments \| segment	1
Sales Revenue, Net \| Product Concentration Risk
Concentration Risk [Line Items]
Concentration of products (in products) \| productLine	2

STOCK PLANS - Schedule of Stock Based Compensation Expenses (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Share-Based Compensation
Stock-based compensation expense	$ 10,954	$ 9,244	$ 29,024	$ 24,461
Stock options	7,181	6,418	19,795	16,917
Restricted stock units	3,552	2,639	8,589	6,950
Employee stock purchase plan	221	187	640	594
Total	10,954	9,244	29,024	24,461
Cost of goods sold
Share-Based Compensation
Stock-based compensation expense	1,546	1,243	4,050	3,490
Research and development
Share-Based Compensation
Stock-based compensation expense	1,401	1,297	3,944	3,772
Selling, general and administrative
Share-Based Compensation
Stock-based compensation expense	$ 8,007	$ 6,704	$ 21,030	$ 17,199

FINANCIAL INSTRUMENTS (Tables)

9 Months Ended

Sep. 30, 2020

Fair Value Disclosures [Abstract]

Schedule of carrying amount and fair value of the long-term debt

The carrying values and fair values of the Company’s financial assets and liabilities at September 30, 2020 are as follows (in thousands):


	Carrying Value			Fair Value Measurements Using
				Level 1		Level 2		Level 3
Financial Assets:
Equity investment (3)	$	12,803		$	12,803	$	—	$	—
Financial Liabilities:

2.375% convertible senior notes due 2022 (1)	$	147,683	(2)	$	—	$	183,800	$	—
0.750% convertible senior notes due 2025 (1)	$	308,781	(2)	$	—	$	441,241	$	—
Acquisition-related contingent consideration (3)	$	21,582		$	—	$	—	$	21,582

(2) Reported at historical cost.

(3) Reported at fair value on a recurring basis.

Schedule of key assumptions used in the valuation of contingent consideration

The following table includes the key assumptions used in the valuation of the Company’s contingent consideration:


Assumption						Ranges Utilized as of September 30, 2020
Discount rates						6.04% to 6.15%
Probabilities of payment for regulatory milestones						3% to 100%
Projected years of payment for regulatory and commercial milestones						2021 to 2023

Schedule of change in contingent consideration recorded at fair value using Level 3 measurements

The change in the Company’s contingent consideration recorded at fair value using Level 3 measurements is as follows (in thousands):


	Contingent Consideration Fair Value
Balance at December 31, 2019	$	38,142

Fair value adjustments and accretion	(1,560)
Payments made	(15,000)
Balance at September 30, 2020	$	21,582

Schedule of short-term investments

The following summarizes the Company’s investments at September 30, 2020 and December 31, 2019 (in thousands):


September 30, 2020 Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value (Level 2)
Short-term:
Asset-backed securities	$	57,729	$	259	$	—	$	57,988
Commercial paper	137,298		41		—		137,339
Corporate bonds	158,368		550		(6)		158,912
U.S. Treasury notes	52,642		2		(2)		52,642
Subtotal	406,037		852		(8)		406,881
Long-term:


U.S. Treasury notes	44,059		6		(3)		44,062
Subtotal	44,059		6		(3)		44,062
Total	$	450,096	$	858	$	(11)	$	450,943


December 31, 2019 Investments	Cost		Gross Unrealized Gains		Gross Unrealized Losses		Fair Value (Level 2)
Short-term:
Asset-backed securities	$	43,166	$	54	$	—	$	43,220
Commercial paper	32,250		20		—		32,270
Corporate bonds	138,012		225		(5)		138,232
Subtotal	213,428		299		(5)		213,722
Long-term:
Asset-backed securities	28,064		10		(15)		28,059
Corporate bonds	36,706		37		(4)		36,739
Subtotal	64,770		47		(19)		64,798
Total	$	278,198	$	346	$	(24)	$	278,520

LEASES - Narrative (Details)	Sep. 30, 2020
Leases [Abstract]
Term of contract	9 years 10 months 24 days

FINANICIAL INSTRUMENTS - Fair Value Measurement Inputs and Valuation (Details) $ in Millions	Sep. 30, 2020 USD ($)
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Total milestone payments yet to be paid in connection with MyoScience acquisition	$ 58.0
Myoscience Acquisition \| Contingent Consideration \| Fair Value, Inputs, Level 3 \| Measurement Input, Discount Rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, contingent consideration	0.0609
Myoscience Acquisition \| Contingent Consideration \| Fair Value, Inputs, Level 3 \| Measurement Input, Expected Milestone Payment
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, contingent consideration	0.252
Myoscience Acquisition \| Contingent Consideration \| Minimum \| Fair Value, Inputs, Level 3 \| Measurement Input, Discount Rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, contingent consideration	0.0604
Myoscience Acquisition \| Contingent Consideration \| Minimum \| Fair Value, Inputs, Level 3 \| Measurement Input, Expected Milestone Payment
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, contingent consideration	0.03
Myoscience Acquisition \| Contingent Consideration \| Maximum \| Fair Value, Inputs, Level 3 \| Measurement Input, Discount Rate
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, contingent consideration	0.0615
Myoscience Acquisition \| Contingent Consideration \| Maximum \| Fair Value, Inputs, Level 3 \| Measurement Input, Expected Milestone Payment
Fair Value Measurement Inputs and Valuation Techniques [Line Items]
Measurement input, contingent consideration	1

DESCRIPTION OF BUSINESS	9 Months Ended
DESCRIPTION OF BUSINESS	Sep. 30, 2020
Organization, Consolidation and Presentation of Financial Statements [Abstract]
DESCRIPTION OF BUSINESS	DESCRIPTION OF BUSINESS Pacira BioSciences, Inc. and its subsidiaries (collectively, the “Company” or “Pacira”) is the leading provider of non-opioid pain management solutions to advance and improve outcomes for health care practitioners and their patients. The Company’s long-acting, local analgesic, EXPAREL® (bupivacaine liposome injectable suspension), was commercially launched in the United States in April 2012. EXPAREL utilizes DepoFoam®, a unique and proprietary delivery technology that encapsulates drugs without altering their molecular structure, and releases them over a desired period of time. In April 2019, the Company added iovera°® to its commercial offering with the acquisition of MyoScience, Inc., or MyoScience. The iovera° system is a handheld cryoanalgesia device used to deliver a precise, controlled application of cold temperature to only targeted nerves. Pacira is subject to risks common to companies in similar industries and stages, including, but not limited to, competition from larger companies, reliance on revenue from two products, reliance on a limited number of manufacturing sites, new technological innovations, dependence on key personnel, reliance on third-party service providers and sole source suppliers, protection of proprietary technology, compliance with government regulations and risks related to cybersecurity. For information on the Company’s risks related to the ongoing worldwide novel coronavirus (COVID-19) pandemic, see Part II, Item 1A. “Risk Factors”, included in this Quarterly Report on Form 10-Q. The Company is managed and operated as a single business focused on the development, manufacture, marketing, distribution and sale of non-opioid pain management and regenerative health solutions. The Company is managed by a single management team, and consistent with its organizational structure, the Chief Executive Officer and Chairman manages and allocates resources at a consolidated level. Accordingly, the Company views its business as one reportable segment to evaluate performance, allocate resources, set operational targets and forecast its future financial results. Novel Coronavirus (COVID-19) Pandemic During 2020, the Company’s net product sales were negatively impacted by the global pandemic caused by a novel strain of coronavirus (COVID-19), which mandated 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; however, the Company does not know how long it will take the surgical community to return to normal operations or if states will return to placing restrictions on elective surgical procedures. The Company’s manufacturing sites are operational and have implemented new safety protocols and guidelines as recommended by federal, state and local governments. To date, there have been no material impacts to the Company’s supply chain. The situation remains dynamic and subject to rapid and possibly material changes. Additional negative impacts may also arise from the COVID-19 pandemic that the Company is unable to foresee. The nature and extent of such impacts will depend on future developments, which are highly uncertain and cannot be predicted.

STOCK PLANS (Tables)

9 Months Ended

Sep. 30, 2020

Stockholders' Equity Note [Abstract]

Schedule of recognized stock-based compensation in consolidated statements of operations

The Company recognized stock-based compensation expense in the periods presented as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Cost of goods sold	$	1,546	$	1,243	$	4,050	$	3,490
Research and development	1,401		1,297		3,944		3,772
Selling, general and administrative	8,007		6,704		21,030		17,199
Total	$	10,954	$	9,244	$	29,024	$	24,461

Stock-based compensation from:
Stock options	$	7,181	$	6,418	$	19,795	$	16,917
Restricted stock units	3,552		2,639		8,589		6,950
Employee stock purchase plan	221		187		640		594
Total	$	10,954	$	9,244	$	29,024	$	24,461

Schedule of the Company's stock option activity and related information

The following tables contain information about the Company’s stock option and restricted stock unit, or RSU, activity for the nine months ended September 30, 2020:


Stock Options	Number of Options	Weighted Average Exercise Price (Per Share)
Outstanding at December 31, 2019	6,706,378	$	42.80
Granted	1,470,003	47.27
Exercised	(1,129,762)	32.08
Forfeited	(403,467)	41.90
Expired	(44,177)	61.63
Outstanding at September 30, 2020	6,598,975	45.56


Restricted Stock Units	Number of Units	Weighted Average Grant Date Fair Value (Per Share)
Unvested at December 31, 2019	631,141	$	41.87
Granted	631,526	48.18
Vested	(238,060)	41.91
Forfeited	(88,308)	43.93
Unvested at September 30, 2020	936,299	45.92

Schedule of Share-based Payment Award, Stock Options, Valuation Assumptions

The fair values of stock options granted were estimated using the Black-Scholes option valuation model with the following weighted average assumptions:


Black-Scholes Weighted Average Assumption						Nine Months Ended September 30, 2020
Expected dividend yield						None
Risk-free interest rate						0.55%
Expected volatility						53.48%
Expected term of options						5.36 years

STOCKHOLDERS' EQUITY (Details) - USD ($) $ in Thousands	9 Months Ended
STOCKHOLDERS' EQUITY (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Sep. 30, 2019
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	$ 354,944	$ 321,226
Balance at end of period	584,690	346,162
Accumulated Net Unrealized Investment Gain (Loss)
AOCI Attributable to Parent, Net of Tax [Roll Forward]
Balance at beginning of period	322	(280)
Other comprehensive income before reclassifications	525	727
Amounts reclassified from accumulated other comprehensive income (loss)	0	0
Balance at end of period	$ 847	$ 447

- Definition

Total of all stockholders' equity (deficit) items, net of receivables from officers, directors, owners, and affiliates of the entity which are attributable to the parent. The amount of the economic entity's stockholders' equity attributable to the parent excludes the amount of stockholders' equity which is allocable to that ownership interest in subsidiary equity which is not attributable to the parent (noncontrolling interest, minority interest). This excludes temporary equity and is sometimes called permanent equity.

+ References + Details

FINANCIAL INSTRUMENTS - Schedule of Available For Sale Securities (Details) - USD ($) $ in Thousands	Sep. 30, 2020	Dec. 31, 2019
Fair Value Measurements
Cost	$ 450,096	$ 278,198
Gross Unrealized Gains	858	346
Gross Unrealized Losses	(11)	(24)
Fair Value	450,943	278,520
Long-Term Investments
Fair Value Measurements
Cost	44,059
Gross Unrealized Gains	6
Gross Unrealized Losses	(3)
Fair Value	44,062
Short-term Investments
Fair Value Measurements
Cost	406,037	213,428
Gross Unrealized Gains	852	299
Gross Unrealized Losses	(8)	(5)
Fair Value	406,881	213,722
Long-Term Investments
Fair Value Measurements
Cost		64,770
Gross Unrealized Gains		47
Gross Unrealized Losses		(19)
Fair Value		64,798
Asset-backed securities \| Short-term Investments
Fair Value Measurements
Cost	57,729	43,166
Gross Unrealized Gains	259	54
Gross Unrealized Losses	0	0
Fair Value	57,988	43,220
Asset-backed securities \| Long-Term Investments
Fair Value Measurements
Cost		28,064
Gross Unrealized Gains		10
Gross Unrealized Losses		(15)
Fair Value		28,059
Commercial paper \| Short-term Investments
Fair Value Measurements
Cost	137,298	32,250
Gross Unrealized Gains	41	20
Gross Unrealized Losses	0	0
Fair Value	137,339	32,270
Corporate bonds \| Short-term Investments
Fair Value Measurements
Cost	158,368	138,012
Gross Unrealized Gains	550	225
Gross Unrealized Losses	(6)	(5)
Fair Value	158,912	138,232
Corporate bonds \| Long-Term Investments
Fair Value Measurements
Cost		36,706
Gross Unrealized Gains		37
Gross Unrealized Losses		(4)
Fair Value		$ 36,739
U.S. Treasury notes \| Short-term Investments
Fair Value Measurements
Cost	52,642
Gross Unrealized Gains	2
Gross Unrealized Losses	(2)
Fair Value	52,642
U.S. Treasury notes \| Long-Term Investments
Fair Value Measurements
Cost	44,059
Gross Unrealized Gains	6
Gross Unrealized Losses	(3)
Fair Value	$ 44,062

MYOSCIENCE ACQUISITION (Tables)

9 Months Ended

Sep. 30, 2020

Business Combinations [Abstract]

Unaudited Pro Forma Summary of Operations


	Nine Months Ended September 30, 2019
Total revenues	$	301,051
Net loss	$	(10,633)
Pro forma basic and diluted net loss per share	$	(0.26)

REVENUE

9 Months Ended

Sep. 30, 2020

Revenue from Contract with Customer [Abstract]

REVENUE

Revenue from Contracts with Customers

The Company’s sources of revenue include (i) sales of EXPAREL in the U.S.; (ii) sales of iovera° in the U.S.; (iii) sales of, and royalties on, its bupivacaine liposome injectable suspension for veterinary use in the U.S. and (iv) license fees and milestone payments. The Company does not consider revenue from sources other than sales of EXPAREL to be material sources of its consolidated revenue. As such, the following disclosure only relates to revenue associated with net EXPAREL product sales.

Net Product Sales

The Company sells EXPAREL through a drop-ship program under which orders are processed through wholesalers based on orders of the product placed by end-users, namely hospitals, ambulatory surgery centers and healthcare provider offices. EXPAREL is delivered directly to the end-user without the wholesaler ever taking physical possession of the product. Product revenue is recognized when control of the promised goods are transferred to the customers, in an amount that reflects the consideration the Company expects to be entitled to in exchange for transferring those goods. EXPAREL revenue is recorded at the time the product is delivered to the end-user.

Revenues from sales of products are recorded net of returns allowances, prompt payment discounts, wholesaler service fees, volume rebates and chargebacks. These reserves are based on estimates of the amounts earned or to be claimed on the related sales. These amounts are treated as variable consideration, estimated and recognized as a reduction of the transaction price at the time of the sale, using the most likely amount method for the gross to net adjustments, except for returns, which is based on the expected value method. The Company includes these estimated amounts in the transaction price to the extent it is probable that a significant reversal of cumulative revenue recognized for such transaction will not occur, or when the uncertainty associated with the variable consideration is resolved. The calculation of some of these items requires management to make estimates based on sales data, historical return data, contracts and other related information that may become known in the future. The adequacy of these provisions is reviewed on a quarterly basis.

Accounts Receivable

The majority of accounts receivable arise from product sales and represent amounts due from wholesalers, hospitals, ambulatory surgery centers and doctors. Payment terms generally range from zero to 37 days from the date of the transaction, and accordingly, there is no significant financing component.

Performance Obligations

A performance obligation is a promise in a contract to transfer a distinct good or service to the customer and is the unit of account in Accounting Standards Codification (ASC) 606. A contract’s transaction price is allocated to each distinct performance obligation and recognized as revenue when, or as, the performance obligation is satisfied.

At contract inception, the Company assesses the goods promised in its contracts with customers and identifies a performance obligation for each promise to transfer to the customer a good that is distinct. When identifying individual performance obligations, the Company considers all goods promised in the contract regardless of whether explicitly stated in the customer contract or implied by customary business practices. The Company’s contracts with customers require it to transfer an individual distinct product, which represents a single performance obligation. The Company’s performance obligation with respect to its product sales is satisfied at a point in time, which transfers control upon delivery of EXPAREL to its customers. The Company considers control to have transferred upon delivery because the customer has legal title to the asset, physical possession of the asset has been transferred, the customer has significant risks and rewards of ownership of the asset and the Company has a present right to payment at that time.

Disaggregated Revenue

The following table represents disaggregated net product sales in the periods presented as follows (in thousands):


	Three Months Ended September 30,				Nine Months Ended September 30,
	2020		2019		2020		2019
Net product sales:
EXPAREL / bupivacaine liposome injectable suspension	$	114,163	$	101,711	$	290,459	$	292,406
iovera°	2,726		2,639		6,391		4,674
Total net product sales	$	116,889	$	104,350	$	296,850	$	297,080

- Definition

The entire disclosure of revenue from contract with customer to transfer good or service and to transfer nonfinancial asset. Includes, but is not limited to, disaggregation of revenue, credit loss recognized from contract with customer, judgment and change in judgment related to contract with customer, and asset recognized from cost incurred to obtain or fulfill contract with customer. Excludes insurance and lease contracts.

+ References

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-URI http://asc.fasb.org/topic&trid=49130388

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 10
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130551-203045

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 13
-Subparagraph (b)(2)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130556-203045

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (b)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 9
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130550-203045

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (e)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (a)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (d)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 15
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130558-203045

Reference 10: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 606
-SubTopic 10
-Section 50
-Paragraph 12
-Subparagraph (c)
-URI http://asc.fasb.org/extlink&oid=121604090&loc=SL49130554-203045

+ Details

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - Concentration risk by major customer - customer	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Concentration of Major Customers
Number of major customers			3
Sales Revenue, Net
Concentration of Major Customers
Percentage of revenue from customers to total revenue	86.00%	90.00%	87.00%	89.00%
Sales Revenue, Net \| Largest wholesaler
Concentration of Major Customers
Percentage of revenue from customers to total revenue	31.00%	34.00%	31.00%	34.00%
Sales Revenue, Net \| Second largest wholesaler
Concentration of Major Customers
Percentage of revenue from customers to total revenue	30.00%	29.00%	31.00%	29.00%
Sales Revenue, Net \| Third largest wholesaler
Concentration of Major Customers
Percentage of revenue from customers to total revenue	25.00%	27.00%	25.00%	26.00%

ACQUISITION–RELATED CHARGES (GAINS) AND PRODUCT DISCONTINUATION, NET (Details) - USD ($) $ in Thousands	3 Months Ended		9 Months Ended
	Sep. 30, 2020	Sep. 30, 2019	Sep. 30, 2020	Sep. 30, 2019
Business Acquisition [Line Items]
Changes in contingent consideration (after MyoScience, Inc. acquisition)		$ 7,300	$ (1,560)	$ 7,327
Non-recurring charge related to discontinuation (less than)	$ 100	100	200	100
Myoscience Acquisition
Business Acquisition [Line Items]
Acquisition-related costs	$ 800	7,300	$ 1,400	7,300
Separation costs, asset write-downs and other restructuring charges		$ 200		$ 4,800

INCOME TAXES - Schedule of Federal, State and Local, and Foreign Income Taxes (Details) - USD ($)
$ in Thousands

3 Months Ended

9 Months Ended

Sep. 30, 2020

Sep. 30, 2019

Sep. 30, 2020

Sep. 30, 2019

Income (loss) before income taxes:

Domestic

$ 8,175

$ (3,205)

$ 10,154

$ (2,183)

Foreign

(2,025)

(2,611)

(2,759)

(5,024)

Income (loss) before income taxes

6,150

(5,816)

7,395

(7,207)

Current taxes:

Federal

State

603

271

959

749

Total current taxes

603

271

959

749

Deferred taxes:

Federal

(104,389)

(1,828)

State

(20,183)

Total deferred taxes

(124,572)

(1,828)

Total income tax (benefit) expense

$ (123,969)

$ 271

$ (123,613)

$ (1,079)

Schedule of Deferred Tax Assets and Liabilities

The significant components of the Company’s deferred tax assets and liabilities at September 30, 2020 and December 31, 2019 are as follows (in thousands):


	September 30,		December 31,
	2020		2019
Deferred tax assets:
Net operating loss carryforwards	$	66,262	$	68,921
Federal and state credits	17,197		16,895
Depreciation and amortization	16,203		15,778
Accruals and reserves	8,043		8,767

Stock based compensation	22,315		23,187
Inventory	1,671		1,646
Other	1,257		2,022
Total deferred tax assets	132,948		137,216
Deferred tax liabilities:
Discount on convertible senior notes	(22,215)		(8,125)
Deferred tax assets, net of deferred tax liabilities	110,733		129,091
Less: valuation allowance	(6,611)		(129,091)
Net deferred tax assets	$	104,122	$	—