Image source: NIH Image Gallery via Flickr.

What: Shares of Pacira Pharmaceuticals (NASDAQ:PCRX), a specialty pharmaceutical company primarily focused on the development of medicines to help in the acute hospital care setting, dipped by as much as 10% during Monday's trading session after reporting mixed first-quarter earnings results.

So what: For the quarter, total revenue grew 12% to $65.5 million from the prior-year quarter, with the vast majority of its revenue (97.4%) derived from the sale of Exparel, an injectable treatment designed to relieve pain after surgery. Expenses, however, jumped 23% year over year to $67.7 million. On an adjusted basis, Pacira reported $5.7 million in net income, which works out to $0.15 per share. This is down from the $9.8 million in net income and $0.27 in adjusted EPS it recorded in the year-ago quarter.

Image source: Flickr user Spirit-Fire.

Comparatively, Wall Street had been looking for Pacira to report a smaller adjusted profit of just $0.09 per share. However, it also anticipated total sales closer to $66.8 million, implying that growth of Exparel disappointed in Q1. For what it's worth, Pacira stood by its expectations for $60 million-$70 million in research and development expenses in 2016, as well as $125 million to $135 million in selling, general, and administrative expenses.

Now what: The big concern Wall Street and investors seem to be having is that Exparel's growth rate is slowing. In 2015, Pacira reported $239.9 million in Exparel sales, representing year-over-year growth of 27%. Based on its Q1 2016 results, we could be looking at Exparel's 2016 growth at just half that rate or even less.

Looking ahead, Pacira hopes to reaccelerate growth by capitalizing on label expansion opportunities in Exparel. Later this year, it expects to launch Exparel for use by oral surgery patients. Peak annual sales vary on Wall Street from the mid-$300 million range to nearly $1 billion annually.

If there is some solace here for Pacira shareholders, it's that it remains profitable and boasts a cash, cash equivalent, and short- and long-term investment pile worth $163.5 million as of the end of Q1. This should provide some downside support following today's earnings-based move.

But being so heavily reliant on one drug is a bit worrying. Even with its reduced forward P/E of 22, I'd caution that a deflation in Pacira's market value could continue until we see a stabilized growth rate for Exparel or a more diversified product portfolio.