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DATE

Tuesday, Aug. 4, 2026 at 4:30 p.m. ET

CALL PARTICIPANTS

• Head of Investor Relations - Susan Mesco
• Chief Executive Officer - Frank Lee
• Chief Commercial Officer - Brendan Teehan
• Chief Financial Officer - Shawn Cross
• Chief Administrative Officer and Secretary - Kristen Williams
• Chief Legal Officer - Tony Molloy
• Chief Medical Officer - Jonathan Slonin

TAKEAWAYS

• Total Revenues -- $192.4 million, representing a 6% increase driven by volume growth across the product portfolio.
• EXPAREL Net Product Sales -- $147.8 million, reflecting a 3% increase over the $142.9 million reported in the second quarter of 2025.
• ZILRETTA Net Product Sales -- $32.6 million, representing a 4% increase from $31.3 million in the prior year's second quarter.
• iovera Net Product Sales -- $6.8 million, growing 22% year over year due to commercial investments and growth initiatives implemented in 2025.
• Licensee Sales -- $3.2 million from third-party bupivacaine liposome sales, compared to $500,000 in the second quarter of 2025.
• GAAP Net Income -- $4.7 million, or $0.12 per diluted share, compared to a net loss of $4.8 million in the second quarter of 2025.
• Adjusted EBITDA -- $48.7 million for the quarter, compared to $54.3 million in the second quarter of 2025.
• Non-GAAP Net Income -- $29.5 million, or $0.73 per diluted share, based on 40.3 million diluted weighted average shares outstanding.
• EXPAREL Volume Growth -- 4% year over year, which was partially offset by shifts in vial mix and discounting related to a third group purchasing organization (GPO).
• Cash and Investments -- $251.0 million as of June 30, 2026, which the company stated would be increased by a $73.6 million payment following the close of the iovera divestiture.
• Market Access -- 150 million covered lives for EXPAREL at midyear, following a contract with UnitedHealthcare that provides separate reimbursement outside the surgical bundle.
• Full-Year Revenue Guidance -- $735 million to $760 million, updated from a prior range of $745 million to $770 million to reflect the iovera divestiture.
• Full-Year EXPAREL Sales Guidance -- $600 million to $620 million, reiterated despite current macroeconomic pressure on elective procedure volumes.
• Non-GAAP SG&A Guidance -- $310 million to $330 million for the full year, adjusted downward from $320 million to $340 million to account for the iovera transaction.
• Non-GAAP Gross Margin -- 78% for the second quarter, compared to 82% in the second quarter of 2025.
• iovera Divestiture Terms -- $70 million upfront with potential for an additional $70 million in revenue-based milestones through Dec. 31, 2031.
• PCRX-201 Pipeline -- Enrollment is underway in Part B of the Phase 2 ASCEND study, with top-line data for Part A expected by the end of 2026.
• ZILRETTA Shoulder OA -- Top-line results for the Phase 3 study are anticipated later in 2026 to support the first potential FDA-approved indication for shoulder osteoarthritis.
• iovera Spasticity Study -- Enrollment is complete in the registrational study, with results expected before the end of 2026.
• GPO Discounting Dynamics -- Management expects the delta between volume and revenue growth for EXPAREL to narrow in the second half of 2026 as the company laps its mid-2025 third GPO contract.
• South Korea Expansion -- LG Chem filed for regulatory approval of EXPAREL in South Korea, with revenues projected to begin in 2027.
• Non-GAAP R&D Expense -- $27.1 million for the quarter, compared to $24.7 million in 2025, reflecting the advancement of the PCRX-201 and label expansion studies.

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RISKS

• Teehan stated, "While orthopedic procedures were relatively stable, elective soft tissue procedures experienced a slowdown with more pronounced declines in the hospital inpatient setting," noting the impact of softer consumer healthcare spending.
• Cross stated, "For the fourth quarter, we expect margins to be slightly below our full year range through the sale of higher cost inventory as well as shutdown-related costs and other expenses."

SUMMARY

Pacira BioSciences (PCRX -1.48%) management reported that the second quarter was defined by the execution of the "5x30" strategy, involving the divestiture of the iovera medical device business and expanded commercial insurance coverage for its lead product. The company transitioned its operations to focus on biopharmaceutical development while securing a reimbursement agreement with UnitedHealthcare for 40 million additional covered lives. Despite macroeconomic factors weighing on certain elective procedure volumes, management maintained its sales outlook for EXPAREL based on outpatient migration and improved market access. The company stated it is approaching clinical catalysts across its pain management and regenerative health pipeline through the end of 2026.

• CEO Lee noted the iovera sale to Zimmer Biomet "sharpens our focus as an innovation-driven biopharmaceutical company while improving our margin profile."
• Management reported that UnitedHealthcare's decision to provide separate reimbursement for EXPAREL brings the product "well within reach of our full year goal of 160 million covered lives."
• Teehan indicated that the payer decision is expected to encourage other commercial payers to evaluate similar reimbursement approaches to expand patient access.
• CFO Cross stated that the company expects an "uptick in R&D expense in the fourth quarter" due to the initiation of new trial phases and product development efforts.
• Management reported that the iovera transaction structure allows them to preserve "participation in iovera's future success in both existing indications and spasticity" through potential milestone payments.
• CEO Lee stated that patent exclusivity for EXPAREL is expected to extend into the 2040s, supporting long-term revenue potential.

INDUSTRY GLOSSARY

• 5x30 Strategy: Pacira's long-term business strategy focused on commercial momentum, cash generation, pipeline advancement, and partnerships.
• Ambulatory Surgery Center (ASC): A healthcare facility focused on providing same-day surgical care, often with separate reimbursement models from hospitals.
• GPO (Group Purchasing Organization): An entity that leverages the purchasing power of a group of businesses to obtain discounts from vendors.
• HCAd: High-capacity adenovirus vector platform used for genetic medicine delivery.
• HOPD: Hospital Outpatient Department.
• iovera: A handheld cryoanalgesia device that uses controlled cold to block pain signals in peripheral nerves.
• MVL: Multivesicular liposome technology used for drug delivery.
• NOPAIN Act: Federal legislation affecting Medicare reimbursement for non-opioid pain management in outpatient settings.
• PCRX-201: An investigational gene therapy candidate for the treatment of knee osteoarthritis.
• ZILRETTA: An extended-release injectable corticosteroid for osteoarthritis knee pain.

Full Conference Call Transcript

Operator: Thank you for standing by. Welcome to Pacira BioSciences' second quarter 2026 earnings conference call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Susan Mesco, Head of Investor Relations. Please go ahead.

Susan Mesco: Thank you. Good afternoon, everyone. Welcome to today's conference call to discuss our Second Quarter of 2026 Financial Results. Joining me are Frank Lee, Chief Executive Officer, Brendan Teehan, Chief Commercial Officer, and Shawn Cross, Chief Financial Officer. Kristen Williams, Chief Administrative Officer and Secretary, Tony Molloy, Chief Legal Officer, and Jonathan Slonin, Chief Medical Officer, are also here for today's question and answer session. Before we begin, let me remind you that this call will include forward-looking statements subject to the safe harbor provisions of federal securities laws. These statements represent our judgment as of today and may involve risks and uncertainties. This may cause our actual results, performance, or achievements to differ materially.

For information concerning risk factors that could affect the company, please refer to our filings with the SEC or the Pacira website. Lastly, as a reminder, we will be discussing non-GAAP financial measures on today's call. A description of these metrics along with our reconciliation to GAAP can be found in the news release issued this afternoon. With that, I will now turn the call over to Frank Lee.

Frank Lee: Thank you, Susan, and good afternoon to everyone joining today's call. On behalf of the remarkable team here at Pacira, I'm pleased to share our continued progress in executing our 5x30 strategy and transitioning into a more innovation-driven pharmaceutical company. Our second quarter performance reflects disciplined execution of our 5x30 strategy, translating into commercial momentum, strong cash generation, pipeline advancement, and high-caliber partnerships. Furthermore, our 5x30 progress was clearly recognized with a decisive shareholder vote for both our strategy and director nominees at our annual meeting in June. Notable second quarter accomplishments include revenues of more than $109 million, even as macroeconomic pressures weighed on certain elective procedures in the hospital setting. Adjusted EBITDA of nearly $50 million.

Establishing a scalable, commercially viable, U.S.-based manufacturing process for PCRX-201, a testament to our team's clinical development and manufacturing capabilities. Opening enrollment in Part B of our Phase 2 ASCENT study for PCRX-201, completing enrollment in iovera registrational study in spasticity, and completing the iovera divestiture on July 31st, and forming a partnership in spasticity with Zimmer Biomet. I'd like to thank the Pacira and Zimmer Biomet teams for working so collaboratively and efficiently for past 30 days to close this transaction. I look forward to continued partnership with our Zimmer Biomet colleagues going forward. I'll begin with a high-level overview of EXPAREL, and then Brendan will cover additional commercial details shortly. EXPAREL continues to penetration share across all segments.

Despite softness and certain deferable soft tissue procedures, which historically wax and wane with macroeconomic conditions. This is particularly notable in-patient settings where separate reimbursement outside the bundle is not available. Looking ahead, we believe we're well positioned to continue to outperform the elective surgery market by advancing 3 key priorities: first, expanding patient access by broadening commercial payer coverage. We recently secured a major win with UnitedHealthcare, now providing separate reimbursement for EXPAREL outside of the surgical bundle. This milestone brings our total covered lives to 150 million at midyear and well within reach of our full year goal of 160 million covered lives. Separately, on ZILRETTA, Brent has some great news to share about ZILRETTA coverage on UnitedHealthcare.

Second, generating disseminating compelling health economic data to strengthen the EXPAREL value proposition. Here, we're also seeing strong momentum with many commercial plans reimbursing significantly higher are getting higher than CMS. And third, increasing penetration in existing and new accounts while driving expansion within macroeconomic resilient procedures in outpatient sites of care. Turning to lifecycle management, we remain on track to report top-line results for our Phase 3 study of ZILRETTA in shoulder OA later this year. If approved, ZILRETTA would become the first drug with an FDA-approved indication specifically for shoulder OA. We also recently completed enrollment in our registrational iovera spasticity study and remain on track to report top-line results before year-end.

As a reminder, we will collaborate with Zimmer Biomet on advancing the spasticity program. The transaction structure provides us with the opportunity to receive additional compensation, assuming clinical and regulatory success. Beyond our commercial products, our pipeline is entering what we believe will be a catalyst-rich period. We expect top-line data from PCRX-201 later this year and continue to advance PCRX-202 with Phase 2 development scheduled to begin later this year. PCRX-202 is a novel hydrogel formulation of ropivacaine designed to provide both rapid onset and long-acting analgesia from a single, simple instillation into the surgical field. If successful, we believe it has potential to complement EXPAREL and further strengthen our leadership position in post-surgical pain management.

Let me spend a moment on PCRX-201, which we believe has potential to represent a paradigm shift in the treatment of knee OA. Our scalable commercial manufacturing process is now up and running, and enrollment in Part B of our Phase 2 study is underway. As a reminder, top-line results for Part A are expected later this year. Part A randomized 49 patients to 1 of 3 treatment groups, PCRX-201 dose A, PCRX-201 dose B, or saline control. All patients received an intra-articular corticosteroid before treatment, allowing the durability of PCRX-201 to be evaluated against the standard of care. The primary objective is safety with secondary efficacy endpoints evaluated at weeks 38 and 52.

We recently received some exciting news for our PCRX-201 program with the acceptance of a Phase 1 manuscript for publication in the Annals of the Rheumatic Diseases, the leading journal in rheumatology. The paper highlights encouraging results from the 72-patient Phase 1 study over 104 weeks. We're also advancing HCAT-based pre-clinical candidates in degenerative disc disease, dry eye disease, and canine OA. We completed a pilot safety study in canine OA and our pilot efficacy study is now initiating. Finally, the last item I'd like to cover is important progress we've made executing new partnerships, a pillar of our strategy. I'll begin with the recently completed divestiture of iovera to Zimmer Biomet.

For Pacira, the transaction sharpens our focus as an innovation-driven biopharmaceutical company while improving our margin profile. Further, it allows us to redirect capital and resources toward higher return growth opportunities aligned with our long-term strategic priorities. We're also excited about what this transaction means for patients. Zimmer is uniquely positioned to maximize iovera's global potential for patients through its scale, orthopedic leadership, and strong presence in [ total knees ]. On the financial front, Pacira will receive up to $140 million with $70 million upfront and an additional $70 million linked to revenue-based milestones. The structure preserves our participation in iovera's future success in both existing indications and spasticity.

We're also pleased to share important progress with LG Chem's recent regulatory filing for EXPAREL in South Korea. This places revenues on track to begin in 2027. As we move forward in the second half of the year, we plan to provide visibility into additional commercial partnerships outside of the U.S. Importantly, we expect EXPAREL revenues to extend through the life of our patents, which provide exclusivity into the 2040s. Taken together, these transactions show how the partnership pillar, the 5x30 strategy, can extend our reach, improve our capital efficiency, and allow us to concentrate resources on our highest priority growth opportunities.

Our experience has shown that partnerships with top-tier organizations can generate value beyond the initial agreement by mutually leveraging our scale, expertise, customer relationships, unlocking commercial value for our partnered assets. In parallel, these partnerships create pathways for potential future collaborations across our portfolios. In summary, Pacira exits the second quarter with strong execution of our 5x30 strategy with commercial momentum, a broader market access position, meaningful upcoming pipeline catalysts, and a growing roster of top-tier partners. With that, I'd like to turn the call over to Bren to share more details on our second quarter commercial performance. Bren?

Brendan Teehan: Thank you, Frank, and good afternoon to all joining us today. During the second quarter, EXPAREL gained penetration and share across orthopedic and soft tissue market segments, even as the broader elective surgery market slowed in certain areas. The impact varied by procedure category. While orthopedic procedures were relatively stable, elective soft tissue procedures experienced a slowdown with more pronounced declines in the hospital inpatient setting. As a reminder, EXPAREL volumes are approximately 60% orthopedic and 40% soft tissue. This dynamic was likely driven by factors including softer consumer health care spending and broader economic uncertainty impacting near-term elective soft tissue procedures.

EXPAREL's continued penetration and share gains this quarter reinforce our confidence that the brand can deliver durable growth as access expands, procedures migrate to outpatient settings and customers continue to prioritize opioid-sparing care. We are particularly encouraged by momentum in 23-hour sites of care as the continued shift towards outpatient surgery and favorable reimbursement dynamics continue to provide a meaningful long-term tailwind for EXPAREL. Another critical area where we continue to make excellent progress is market access. At the beginning of July, we shared that UnitedHealthcare became the latest major national payer to expand coverage for EXPAREL through separate reimbursement outside the surgical bundle.

With approximately 40 million covered lives, United is not only the largest health insurer in the U.S., but also among the most influential. With United and additional recent wins, EXPAREL is now available to well over 150 million covered lives with separate reimbursement outside the surgical bundle. This represents roughly 50% of all medically insured lives in the U.S. and significant progress towards our year-end goal of 160 million covered lives. As providers gain visibility into expanding coverage, we anticipate further adoption and utilization for EXPAREL overtime. We also believe United's decision will encourage commercial payers to evaluate similar reimbursement approaches, which could help expand patient access in the future.

Looking ahead, our team remains firmly focused on expanding market access through additional commercial coverage, utilizing our growing body of compelling health, economic, and outcome studies to drive awareness around the EXPAREL value proposition, and broadening utilization within existing and new accounts while increasing demand with the new service line less susceptible for economic pressures. Turning to ZILRETTA and iovera. Both products are performing well with solid growth in the quarter as the commercial investments we made last year are creating lift. For ZILRETTA, we are seeing demonstrated momentum from the Pacira team's focus on promotional impact, along with our J&J partnership.

For iovera, the Pacira team delivered another stellar quarter, and with the Zimmer transaction now closed, we believe iovera sits within the ideal portfolio to further unlock its full global potential. Separately on the payer front, beyond the positive coverage of EXPAREL, UnitedHealthcare has placed ZILRETTA on its preferred drug list. Importantly, this eliminates any prior authorization requirements, which is a key advantage versus competing early OA interventions. In summary, we are pleased with the first half of the year and believe we are well positioned for sustainable top-line growth for the remainder of the year and beyond. I'd like to now turn the call over to Shawn for his financial review. Shawn Cross Thank you, Bren.

I'll start with an update on revenue and margin trends. Second quarter total revenues were $192.4 million, representing a 6% increase over the second quarter of 2025. EXPAREL remains a significant source of revenue with net sales increasing by 3% to $147.8 million versus $142.9 million in 2025. Volume growth of approximately 4% was partially offset by a shift in vial mix and discounting from our third GPO, which went live mid-2025. As we move forward for the remainder of 2026, we expect the delta between volume and revenue growth to narrow with the recent lapping of the third GPO. For ZILRETTA, second quarter sales grew by 4% to $32.6 million versus $31.3 million reported in 2025.

As Bren mentioned, this was largely attributable to the growth initiatives implemented last year, including our dedicated ZILRETTA sales force. [ For ] iovera, sales increased by 21% to $6.8 million, compared to $5.6 million in the second quarter of 2025. Again, this was largely attributable to growth initiatives implemented last year. [ Turning to ] gross margins, on a consolidated basis, our second quarter non-GAAP gross margin was in line with our expectations at 78% versus 82% for last year. For the non-GAAP R&D expense, the second quarter increased to $27.1 million from $24.7 million last year.

This increase relates to our advancing Phase 2 study of PCRX-201 as well as our label expansion studies, all of which are on track for top-line readouts at year-end. In addition, we're supporting three promising HCAT-based pre-clinical programs. Non-GAAP SG&A expense came in at $81.3 million for the second quarter versus $77.2 million last year. This increase relates to non-recurring costs specific to the contested election of directors at our 2026 Annual Meeting of Stockholders. All of this resulted in the GAAP net income of $4.7 million, or $0.12 per basic diluted share, and another quarter of significant adjusted EBITDA of approximately $48.7 million.

As for the balance sheet, we continue to be in a position of strength with $251 million in cash and investments, which will be further enhanced by a $70 million upfront payment related to the closing of the Zimmer transaction. With a strong balance sheet and a business that is producing significant operating cash flow, we believe we are well-equipped to advance our 5x30 growth strategy and create shareholder value. That brings us to our full year guidance for 2026, where we are updating the following ranges to adjust for the closing of the Zimmer transaction. The total revenue range is now $735 million to $760 million versus our previously guided range of $745 million to $770 million.

For SG&A, we are now guiding to $310 million to $330 million versus our previously guided range of $320 million to $340 million. And lastly, stock-based compensation of $54 million to $59 million versus our previously guided range of $54 million to $62 million. For all remaining items, we are reiterating our previously guided ranges as follows: EXPAREL net product sales of $600 million to $620 million. With respect to quarterly trends, we anticipate the remainder of 2026 will largely follow historical patterns, [ EXPAREL ] being our largest dollar contributor. For ZILRETTA, our guidance assumes the remainder of 2026 will be largely in line with 2025.

While we are encouraged by the recent quarterly performance, we will wait to gain more visibility before updating growth assumptions. The final component of our 2026 revenue guidance relates to approximately $7 million expected revenues from our licensing agreement for the veterinary market. Non-GAAP gross margin of 77% to 79%. With respect to quarterly cadence, we expect the next quarter to continue to benefit from the sale of lower cost EXPAREL inventory to fall within our guided range. For the fourth quarter, we expect margins to be slightly below our full year range through the sale of higher cost inventory as well as shutdown-related costs and other expenses. Non-GAAP R&D expense of $105 million to $115 million.

With the recent initiation of Part B of our Phase 2 ASCENT study of PCRX-201 and certain EXPAREL and ZILRETTA product development efforts, we expect an uptick in R&D expense in the fourth quarter. And lastly, for those modeling adjusted EBITDA, we expect our 2026 depreciation expense to be approximately $30 million. With a focused business model, durable cash flows supported by EXPAREL and ZILRETTA, and a pipeline entering a catalyst-rich period, we believe Pacira is exceptionally well-positioned for the future. With that, I'll turn the call back to Frank.

Frank Lee: Thanks, Shawn. As we discussed this morning, our second quarter reflects clear progress against our 5x30 strategy. We delivered solid financial performance, forms key partnerships, and advanced multiple value-driving pipeline programs. I'm excited about the second half of the year in the base business and in our upcoming pipeline catalysts. So with that, we're ready to open up the call for questions. Operator?

Operator: Yes, thank you. Your first question comes from the line of Dennis Ding with Jefferies. Your line is now open.

Yuchen Ding: I have two, if I may. Number 1, on [NOPAIN, is there risk of this expiring at the end of 2027? And I guess what are the logistics here to renewing this and is there any particular bill we should be focused on or do you think this would be tacked on to a larger bill? And then number 2, you guys reiterated EXPAREL guidance despite Q2 being a little bit soft. So I guess talk about your confidence in navigating these broader macro dynamics around consumer spending. And I guess what's going to be the driver of growth here?

And do you still expect NOPAIN-driven volume acceleration in the second half or is that going to be tougher to achieve because of the macro dynamics you mentioned?

Frank Lee: Hey, Dennis, Frank Lee here. Thanks for the question. So on the first one about NOPAIN expiry, maybe some thoughts here and I'll turn it over to Tony, our General Counsel and Head of Government Relations. First off, as we step back, as we know, at present, it's due to expire/be re-upped at the end of last year -- I'm sorry, next year. And we're making very good progress, as you've just heard from Brendan, in terms of what we're doing around commercial payers. And the fact that we've got United on board is a real win. For those of you who've been around payers, United is the benchmark.

And so we're really pleased by that and all the health economic data that supports inclusion in payers going forward. So bottom line there is what I'm saying is that commercial payers are picking it up. There's a clear health economic story. And so let me just turn it over to Tony to talk a little bit about NOPAIN, which is specifically for CMS patients in the outpatient setting. So, Tony?

Anthony Molloy: Thanks, Frank. We're working -- we're actually trying to -- we're working with two paths. We're working directly with CMS who has the ability to provide, basically, the same reimbursement that NOPAIN does through its annual grant rulemaking cycle. And then we're also working with Congress. We would expect, similar to last time, that this would be tacked on and be part of a larger bill. We're not anticipating it being a standalone legislation. And the reality is these things usually happen when they need to happen and not earlier. So we're anticipating something towards the end of next year.

Frank Lee: Thanks, Tony. And then Dennis, you had asked about Q2. And so just maybe some high-level thoughts here, and I'll turn it over to Bren for some additional commentary. Just at a high level, just to make sure we're super clear on this, is we're optimistic about the second half. And the reason is that, as Bren mentioned, we've increased penetration across all segments. So that's very important. And again, as I mentioned in my comments, these sorts of procedures and the inpatient setting that are more deferable tend to wax and wane with macroeconomic conditions. So, I mean, with that, let me turn it to Bren for his additional thoughts here.

Brendan Teehan: Dennis and Frank gives good commentary there. In the second half, we're focused on several, I think, key and important growth drivers. The first is the rapidly growing ASC and hospital outpatient segments, both of which are outpacing the broader hospital market for us. We can and will increase our breadth of coverage there to cover those procedures that are taking place. The second is this, what I would call payer tipping point. UnitedHealthcare, as Frank pointed out, is a substantial addition. Even -- since the UnitedHealthcare contract, we've had several other payers come on board pushing us well beyond the 150 million patient range. That to us is an encouraging sign of where everything is headed.

And then finally, we take a lot of confidence in both the penetration and share that we've been able to generate. It is significantly outpacing the total available market near term, and we expect with these additional payer wins, it will continue long term. That, coupled with our health economics and outcomes research data, which is an expanding evidence package that demonstrates that EXPAREL is well worth the price for the substantial cost that it offsets, give us a lot of confidence both near term and longer term.

Frank Lee: Thanks, Bren. And just one last thought here, Dennis, is that as a reminder, these commercial payer wins are very important in the outpatient setting where EXPAREL is reimbursed outside the bundle separately. And as we've talked about before in commercial payer settings, the reimbursement, that is the remittance, is substantially higher versus the CMS reimbursement. So we've got a good tailwind there.

Operator: Your next question comes from the line of Serge Belanger with Needham.

Serge Belanger: I guess just a follow-up on EXPAREL. Volume growth of 4%, a bit of a step down from the prior quarters. I'm just curious if the softness that you've seen in the second quarter has continued into the third quarter and could continue later in the summer. And then now that you've divested iovera, just curious if that kind of changes your appetite for BD and adding additional assets to the portfolio.

Frank Lee: So the first one was around Q2 and what are we seeing in Q3. I'd say it's early days. And as Bren mentioned, what we're really excited about is that in the outpatient setting and places where we have a tailwind from a commercial payer perspective, we're seeing it substantially outperform the marketplace. And so stay tuned. Our business is focused on growth going forward in those macro resilient procedure types. And again, our penetration has increased across all these segments. So we'll see how long-lasting the cycle is. As I mentioned, these kinds of procedures in the inpatient setting, where it's not reimbursed separately outside of the bundle, tends to wax and wane historically.

So second question was around iovera divestiture and what that means from a BD perspective. So first of all, let me just say that the team did a remarkable job of getting us here. And as you know, initially, we started out with partnership discussions with Zimmer Biomet, and this matured into a very thorough process where we believe we have the right person, right group of people and company taking this asset forward, not only in the U.S., but outside the U.S.

So it was closed this past Friday, July 31st, with tremendous effort, and I'm very, very confident that this team is the right team, that is Zimmer Biomet, to maximize the value of iovera, both here in the U.S. and outside of the U.S. Separately, with respect to BD, as Shawn has reiterated many times, we're going to be very, very thoughtful about maximizing shareholder value and returns in our capital allocation. So we'll be looking very carefully at that, but our strategy, as we've articulated before, is to focus on those things that could be accretive in the near term and take very careful calculated, I would say, risk-managed approaches to the pipeline.

So that hasn't changed, and so we'll continue to make sure that our capital allocation is consistent with the way we've behaved going forward to maximize shareholder value. And I guess one last thing that I'd add is that now we are very clear-minded about being a pharmaceutical company as opposed to being a pharmaceutical and medtech company, which as we've talked about before, is very different. And I think this focus will help us execute even better going forward.

Operator: Your last question comes from the line of Hardik Parikh with JPMorgan.

Hardik Parikh: So two part. One, well, first is just building off some of the earlier questions. To achieve your kind of implied second half guide for EXPAREL, what have you assumed about the macro headwinds? Do you need a recovery to meet that guide? And then the second part is you guys have utilized the partnership model in ZILRETTA, could you envision yourself partnering in the U.S. with EXPAREL with like a distributor model?

Frank Lee: You asked about whether a quota recovery is needed. What we're basing our growth and numbers on is continued in terms of what we see right now in the softness and really growing in the places where we can grow. As Bren articulated very clearly, we've had very good success in the outpatient setting, in those procedures that are macro resilient. And you can see that we've had some substantial commercial payer wins that are directly applicable in those kind of settings. So again, as you know, that in an inpatient setting, EXPAREL is not reimbursed separately outside of the bundle.

And so that's what we've assumed, and we've seen good results as we've focused our business toward that, those segments of our business. In terms of the partnering model, I want to step back a little bit. As we've articulated in our 5x30, partnerships are very important. And to-date, we've signed some very good partnerships. We signed LG Chem, we signed Johnson & Johnson, and now with Zimmer Biomet, a partnership for spasticity. So we remain open-minded about how we can cost effectively and efficiently get our products out to our customers, both here in the U.S. and outside the U.S. So we remain very open-minded about that.

We will certainly always have our direct field forces and support, but if the question is would we want to, at some point, consider partnership of EXPAREL to extend our reach? That's certainly within the realm of possibility, but we'd have to do that in a way that's very cost-effective and returns value to both organizations. And one of the ways we've done that is ex-U.S. As you can see with our LG Chem partnership, and the good news there is, as I mentioned, they have already filed now in South Korea and we are going to see the fruits of that labor in terms of revenue come to us in 2027.

Operator: The next question comes from the line of Sahil Dhingra with RBC Capital Markets.

Sahil Dhingra: This is Sahil for [ Dagne ]. I have two questions. First is on the EXPAREL volume growth. Can you expand what was the ASC versus HOPD versus community hospital split in terms of the volume growth? And are larger IDNs finally moving the needle or is the growth still concentrated in the ASCs and the community hospitals?

Frank Lee: Let me address it briefly and I'll turn it over to Bren for some additional commentary. With regard to the breakout of the EXPAREL volume, as you've asked, we typically don't break it out that way, so we don't have those data to provide to you. With respect to the contribution and growth of IDNs versus other parts of our business, I'm going to turn it over to Bren for his thoughts here.

Brendan Teehan: I'm confident that the split of our business probably is reflective of other things you've heard in the second quarter. There are two dynamics that we have to take into account. One is the migration of procedures to the outpatient setting, and particularly, to ASCs. The hospital volumes, I think, in general are down, but they're further impacted, I would say, by this deferred elective soft tissue procedure dynamic. So, EXPAREL volumes were still significantly higher than what we saw for hospital procedures.

In ASCs, which were modestly up for total available market, I would say that we significantly outpaced that in the ASC setting, which is another reason, given the reimbursement that we've just discussed, multiple payer wins including UnitedHealthcare in that space, that we feel confident in our ability to continue to capitalize on both the migration of procedures to that particular site of care, but also the value proposition for EXPAREL there.

Frank Lee: Anything else?

Sahil Dhingra: Yes, my next question is on the PCRX-201 Part A timing. Can you tighten the year-end timeline for us and will the data be disclosed at the medical meeting or will it be a standalone disclosure?

Frank Lee: So let me step back here. I'm very excited about the upcoming catalysts as we go through the second half of the year and certainly the catalysts include, as I mentioned earlier, number 1, the spasticity data, registrational study with iovera. Number 2, the ZILRETTA shoulder OA data, which is again, another registrational study. And number 3, as you mentioned, PCRX-201 Part A. So with that Part A piece, I'm going to turn it over to Jonathan here, our Chief Medical Officer, to talk a little bit about your question and you had asked about timing and some other things. So, Jonathan?

Jonathan Slonin: So, yes, our plan is at the end of the year, we're going to have these three readouts, top-line readouts for Part A. Remember that Part A is the first part of our two-part Phase 2 trial, and we'll provide insights and powered for safety, and we will look for some efficacy trends. We estimate reporting those top-line results at the end of the year, and we'll continue throughout 2027 to report additional data sets.

Operator: I'm showing no further questions at this time. I would now like to turn it back to Susan Mesco for closing remarks.

Susan Mesco: Thank you, [ Kathy ], and thanks to all on the call for your questions and time today. We are excited about the opportunities that lie ahead for us. Throughout the remainder of the year, we will continue to ensure we are well positioned for long-term success by executing our 5x30 plan to advance our mission. Thank you and be well.

Operator: Thank you. This does conclude the program and you may now disconnect.