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FLEXION ACQUISITION | 6 Months Ended
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Jun. 30, 2022
Business Combination and Asset Acquisition [Abstract] |
FLEXION ACQUISITION | FLEXION ACQUISITION On November 19, 2021, the Company acquired Flexion (the “Flexion Acquisition”), a biopharmaceutical company focused on the discovery, development, and commercialization of novel, local therapies for the treatment of patients with musculoskeletal conditions, beginning with osteoarthritis, the most common form of arthritis. Upon consummation of the Flexion Acquisition, Flexion became a wholly-owned subsidiary of the Company and was renamed Pacira Therapeutics, Inc. The total consideration for the Flexion Acquisition was approximately $578.8 million consisting of: (i) $448.5 million of cash paid to former Flexion stockholders and to settle restricted stock units and in-the-money stock options; (ii) an $85.1 million cash payment to repay Flexion debt that was not assumed by the Company and (iii) $45.2 million of estimated contingent consideration related to contingent value rights, or CVRs, that were issued to Flexion shareholders and certain equity award holders in conjunction with the Flexion Acquisition. The consideration is subject to adjustments based on the achievement of certain potential milestone payments. Up to an additional $380.2 million in the aggregate may be payable to holders of the CVRs if each of the applicable milestones are achieved. No contingent consideration milestones were achieved in the six months ended June 30, 2022. See Note 10, Financial Instruments, for information regarding the methodology and key assumptions used in the fair value measurements of contingent consideration and for more information regarding the changes in fair value. The Company is finalizing its valuation of liabilities and tax analyses, and anticipates finalizing the purchase price allocation as the information necessary to complete the analysis is obtained, but no later than one year after the acquisition date. The following table sets forth the preliminary allocation of the Flexion Acquisition purchase price to the estimated fair value of the net assets acquired at the acquisition date (in thousands):
|  | Amounts Recognized at the Acquisition Date (as previously reported) (a) |  | Measurement Period Adjustments (b) |  | Amounts Recognized at the Acquisition Date (as adjusted)
ASSETS ACQUIRED |  |  |  |  |  |
Cash and cash equivalents |  | $ | 113,562 |  |  | $ | — |  |  | $ | 113,562 |
Short-term available-for-sale investments |  | 11,153 |  |  | — |  |  | 11,153 |
Accounts receivable |  | 32,838 |  |  | — |  |  | 32,838 |
Inventories |  | 29,667 |  |  | — |  |  | 29,667 |
Prepaid expenses and other assets |  | 4,852 |  |  | — |  |  | 4,852 |
Fixed assets |  | 23,307 |  |  | — |  |  | 23,307 |
Deferred tax assets |  | 58,015 |  |  | — |  |  | 58,015 |
Right-of-use assets |  | 6,585 |  |  | — |  |  | 6,585 |
Identifiable intangible assets |  | 480,000 |  |  | — |  |  | 480,000 |
In-process research and development (IPR&D) |  | 61,000 |  |  | — |  |  | 61,000 |
Total assets |  | $ | 820,979 |  |  | $ | — |  |  | $ | 820,979 |
LIABILITIES ASSUMED |  |  |  |  |  |
Accounts payable |  | $ | 9,794 |  |  | $ | — |  |  | $ | 9,794 |
Accrued expenses |  | 22,746 |  |  | 957 |  |  | 23,703 |
Deferred revenue |  | 10,000 |  |  | — |  |  | 10,000 |
Lease liabilities |  | 6,585 |  |  | — |  |  | 6,585 |
Other liabilities |  | 1,187 |  |  | — |  |  | 1,187 |
Long-term debt |  | 201,450 |  |  | — |  |  | 201,450 |
Total liabilities |  | 251,762 |  |  | 957 |  |  | 252,719 |
Total identifiable net assets acquired |  | 569,217 |  |  | (957) |  |  | 568,260 |
Goodwill |  | 9,628 |  |  | 957 |  |  | 10,585 |
Total consideration transferred |  | $ | 578,845 |  |  | $ | — |  |  | $ | 578,845 |
(a) As previously reported in the Company’s Annual Report on Form 10-K for the year ended December 31, 2021. (b) Represents pre-acquisition expenses that were paid by the Company in 2022, partially offset by the release of estimated reserves. Unaudited Pro Forma Summary of Operations The following table shows the unaudited pro forma summary of operations for the three and six-month periods ended June 30, 2021, as if the Flexion Acquisition had occurred on January 1, 2020. This pro forma information does not purport to represent what the Company’s actual results would have been if the Flexion Acquisition had occurred as of January 1, 2020, and is not indicative of what such results would be expected for any future period (in thousands, except per share amounts):
| Three Months Ended June 30, 2021 |  | Six Months Ended June 30, 2021
Total revenues | $ | 163,765 |  |  | $ | 307,381 |
Net loss | $ | (3,367) |  |  | $ | (20,487) |
Pro forma basic and diluted net loss per share | $ | (0.08) |  |  | $ | (0.47) |
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 Flexion. The summary pro forma financial information primarily reflects the following pro forma adjustments: •Recognition of the income tax benefit resulting from decreasing Flexion’s existing valuation allowance on deferred tax assets for the three and six months ended June 30, 2021; •Removal of Flexion’s interest expense and associated deferred financing cost amortization related to the $85.1 million of debt not assumed; •Adjustments to the Company’s interest income for the cash used to acquire Flexion; •Additional cost of goods sold related to a step-up value in inventory; •Additional amortization expense from the acquired developed technology intangible assets; •Additional depreciation of Flexion’s fixed assets; and •Additional lease expense on Flexion’s right-of-use, or ROU, assets. In addition, all of the above adjustments were adjusted for the applicable tax impact.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI https://asc.fasb.org/topic&trid=2303972 Reference 2: http://www.xbrl.org/2003/role/disclosureRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -SubTopic 20 -Section 50 -Paragraph 5 -Subparagraph (b) -URI https://asc.fasb.org/extlink&oid=128092470&loc=d3e4946-128472 + Details
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