Pacira BioSciences, Inc.PCRX
Pacira BioSciences, Inc. Income Taxes Disclosure
INCOME TAXES
Income (loss) before income taxes and the related tax expense is as follows (in thousands):
| Year Ended December 31, | |||||||||||||||||
| 2025 | 2024 | 2023 | |||||||||||||||
| Income (loss) before income taxes: | |||||||||||||||||
| Domestic | $ | 19,615 | $ | (65,325) | $ | 66,257 | |||||||||||
| Foreign | (2,741) | 2,219 | (4,556) | ||||||||||||||
| Total income (loss) before income taxes | $ | 16,874 | $ | (63,106) | $ | 61,701 | |||||||||||
| Current taxes: | |||||||||||||||||
| Federal | $ | 1,855 | $ | 9,295 | $ | 1,686 | |||||||||||
| State | 1,495 | 6,527 | 2,444 | ||||||||||||||
| Foreign | 13 | 11 | 1 | ||||||||||||||
| Total current taxes | $ | 3,363 | $ | 15,833 | $ | 4,131 | |||||||||||
| Deferred taxes: | |||||||||||||||||
| Federal | $ | 8,038 | $ | 18,784 | $ | 16,790 | |||||||||||
| State | (1,486) | 1,837 | (1,175) | ||||||||||||||
| Foreign | (75) | — | — | ||||||||||||||
| Total deferred taxes | $ | 6,477 | $ | 20,621 | $ | 15,615 | |||||||||||
| Total income tax expense | $ | 9,840 | $ | 36,454 | $ | 19,746 | |||||||||||
A reconciliation of income tax expense (benefit) at the U.S. federal statutory rate to the provision for income taxes after the adoption of ASU 2023-09 is as follows for the year ended December 31, 2025 (dollars in thousands):
| Year Ended December 31, 2025 | ||||||||||||||
| Amount | Tax Rate | |||||||||||||
| U.S. statutory rate applied to income before taxes | $ | 3,544 | 21.00 | % | ||||||||||
State and local income taxes, net of federal effect (1) | (513) | (3.04) | % | |||||||||||
| Foreign tax effects - U.K.: | ||||||||||||||
| Nondeductible items | 1,061 | 6.29 | % | |||||||||||
| Valuation allowance | 268 | 1.59 | % | |||||||||||
| Return to provision | (396) | (2.34) | % | |||||||||||
| Other items | 21 | 0.12 | % | |||||||||||
| Rate differential | (343) | (2.03) | % | |||||||||||
| Foreign tax effects—other foreign jurisdictions | (97) | (0.57) | % | |||||||||||
| Total foreign tax effects | 514 | 3.06 | % | |||||||||||
| Tax credits: R&D | (4,098) | (24.29) | % | |||||||||||
| Changes in valuation allowances | 840 | 4.98 | % | |||||||||||
| Non-taxable or nondeductible items: | ||||||||||||||
| Meals and entertainment | 419 | 2.48 | % | |||||||||||
| Stock-based compensation | 6,970 | 41.31 | % | |||||||||||
| Executive compensation | 1,543 | 9.14 | % | |||||||||||
| Contingent consideration | (457) | (2.71) | % | |||||||||||
Transaction-related items (2) | (657) | (3.89) | % | |||||||||||
| Other items | 379 | 2.25 | % | |||||||||||
| Total non-taxable or nondeductible items | 8,197 | 48.58 | % | |||||||||||
| Changes in unrecognized tax benefits | 1,356 | 8.04 | % | |||||||||||
| Income tax expense and effective tax rate | $ | 9,840 | 58.33 | % | ||||||||||
(1) State and local taxes in California, New Jersey and Texas comprise the majority of this category and is inclusive of credits. | ||||||||||||||
(2) Transaction-related items primarily related to a $4.2 million non-taxable equity investment gain that occurred when the Company remeasured its previously held equity interest in GQ Bio to its acquisition date fair value. See Note 12, Financial Instruments, for more information. | ||||||||||||||
A reconciliation of income tax expense (benefit) at the U.S. federal statutory rate to the provision for income taxes prior to the adoption of ASU 2023-09 is as follows for the years ended December 31, 2024 and 2023 (dollars in thousands):
| Year Ended December 31, | ||||||||||||||||||||||||||
| 2024 | 2023 | |||||||||||||||||||||||||
| Amount | Tax Rate | Amount | Tax Rate | |||||||||||||||||||||||
| U.S. statutory rate applied to (loss) income before taxes | $ | (13,252) | 21.00 | % | $ | 12,957 | 21.00 | % | ||||||||||||||||||
| State taxes | 7,028 | (11.14) | % | 1,770 | 2.87 | % | ||||||||||||||||||||
| Foreign taxes | (104) | 0.16 | % | (1,798) | (2.91) | % | ||||||||||||||||||||
| Change in valuation allowance | (589) | 0.93 | % | 2,192 | 3.55 | % | ||||||||||||||||||||
| Executive compensation | 2,426 | (3.84) | % | 3,171 | 5.14 | % | ||||||||||||||||||||
| Stock-based compensation | 9,918 | (15.72) | % | 4,070 | 6.60 | % | ||||||||||||||||||||
| Tax credits | (5,674) | 8.99 | % | (3,327) | (5.39) | % | ||||||||||||||||||||
| Reserves | 2,661 | (4.22) | % | 389 | 0.63 | % | ||||||||||||||||||||
| Goodwill impairment | 34,281 | (54.32) | % | — | — | % | ||||||||||||||||||||
| Non-taxable or nondeductible items: | ||||||||||||||||||||||||||
| Contingent consideration | (936) | 1.48 | % | (719) | (1.17) | % | ||||||||||||||||||||
| Nondeductible expenses | 564 | (0.89) | % | 975 | 1.58 | % | ||||||||||||||||||||
| Other | 131 | (0.20) | % | 66 | 0.10 | % | ||||||||||||||||||||
| Income tax expense and effective tax rate | $ | 36,454 | (57.77) | % | $ | 19,746 | 32.00 | % | ||||||||||||||||||
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. 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. The Company records a valuation allowance on U.S. capital losses and on foreign net deferred tax balances as it is more-likely-than-not the tax benefits are not realizable.
Significant components of the Company’s deferred tax assets and liabilities at December 31, 2025 and 2024 are as follows (in thousands):
| December 31, | |||||||||||
| 2025 | 2024 | ||||||||||
| Deferred tax assets: | |||||||||||
| Net operating loss carryforwards | $ | 120,280 | $ | 124,536 | |||||||
| Federal and state credits | 13,995 | 12,351 | |||||||||
| Accruals and reserves | 15,849 | 16,114 | |||||||||
| Stock based compensation | 23,652 | 23,078 | |||||||||
| Inventory reserves | 2,470 | 2,639 | |||||||||
| Interest | 4,130 | 5,716 | |||||||||
| Other | 6,332 | 5,126 | |||||||||
| Total deferred tax assets | 186,708 | 189,560 | |||||||||
| Deferred tax liabilities: | |||||||||||
| Depreciation and amortization | (40,937) | (34,368) | |||||||||
| Total deferred tax liabilities | (40,937) | (34,368) | |||||||||
| Deferred tax assets, net of deferred tax liabilities | 145,771 | 155,192 | |||||||||
| Less: valuation allowance | (26,130) | (24,816) | |||||||||
| Net deferred tax assets | $ | 119,641 | $ | 130,376 | |||||||
On July 4, 2025, federal legislation known as the One Big Beautiful Bill Act (the “OBBBA”) was enacted, resulting in changes to U.S. federal income tax law. Significant provisions of the OBBBA include the permanent extension of certain
provisions of the 2017 Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. In accordance with ASC 740, Income Taxes, the Company is required to recognize the effect of the tax law changes in the period of enactment, such as remeasuring its estimated U.S. deferred tax assets and liabilities. The Company had $124.6 million of a gross deferred tax asset attributed to unamortized U.S. capitalized research and development costs as of December 31, 2024, of which 50% will be deductible in each of its 2025 and 2026 income tax returns. There are no other material impacts to the Company related to the enactment of the OBBBA.
On May 9, 2024, and on May 10, 2024, the Company entered into privately negotiated Capped Call Transactions related to the 2029 Notes. See Note 10, Debt, for further discussion of the Capped Call Transactions. The capped call was recorded as a reduction to additional paid-in-capital at its cost of $26.7 million. A related deferred tax asset of $6.5 million was recorded with an offset to additional paid-in-capital and will be amortized as a current tax deduction over a 60-month period. As of December 31, 2025 and 2024, $4.4 million and $5.7 million, respectively, of the related capped call deferred tax asset remains in the Company’s deferred tax balances.
As of December 31, 2025, the Company’s federal net operating losses, or NOLs, and federal tax credit carryforwards totaled $418.8 million and $5.6 million, respectively. The Company also had state NOLs and state tax credit carryforwards of $495.5 million and $8.4 million, respectively, which are subject to change on an annual basis due to variations in the Company’s annual state apportionment factors. The state NOLs will begin to expire in 2028. The Company had non-U.S. NOLs of $12.6 million at December 31, 2025, which do not expire.
Since the Company had cumulative changes in ownership of more than 50% within a three-year period, under IRC sections 382 and 383, the Company’s ability to use certain NOLs, tax attributes and credit carryforwards to offset taxable income or tax will be limited. Such ownership changes were triggered by the initial acquisition of the Company’s stock in 2007 as well as cumulative ownership changes arising as a result of the completion of the Company’s initial public offering, other financing transactions and the Flexion Acquisition in 2021. As a result of these ownership changes, the Company has $451.2 million of federal NOLs subject to annual limitations and are available as follows: $28.3 million will become available in 2026, and $6.9 million in 2027 and thereafter.
In accordance with ASC Topic 740, the Company establishes a valuation allowance for deferred tax assets that, in its judgment, are not more-likely-than-not realizable. These judgments are based on projections of future income—including tax-planning strategies—by individual tax jurisdictions. In each reporting period, the Company assesses the likelihood that its deferred tax assets will be realized and determines if adjustments to its valuation allowance are appropriate. The Company had a net increase in its valuation allowance of $1.3 million in the year ended December 31, 2025 and a net decrease of $0.7 million for the year ended December 31, 2024. The $1.3 million net increase in the current year valuation allowance is primarily related to changes in foreign net deferred tax assets and domestic capital loss carryforwards. The Company continues to maintain a full valuation allowance against net deferred tax assets in certain jurisdictions (including the U.K. and Ireland) since it is more-likely-than-not the tax benefit related to the foreign losses are not realizable.
In 2025, the Company recorded a $1.4 million net increase to unrecognized tax benefits, or UTBs of which a $1.7 million increase is related to tax credit and filing positions taken during the year, and a $0.3 million decrease related to prior year tax credits. The Company’s UTB liability at December 31, 2025 was $10.7 million. The changes in the Company’s UTBs for the years ended December 31, 2025 and 2024 are summarized as follows (in thousands):
| Unrecognized Tax Benefit | ||||||||
| Balance at December 31, 2023 | $ | 6,711 | ||||||
| Additions for prior year positions | 1,189 | |||||||
| Additions for current year positions | 1,472 | |||||||
| Balance at December 31, 2024 | 9,372 | |||||||
| Additions for current year positions | 1,652 | |||||||
| Reduction for prior year positions | (296) | |||||||
| Balance at December 31, 2025 | $ | 10,728 | ||||||
The UTBs as of December 31, 2025, 2024 and 2023 would, if subsequently recognized, favorably impact the effective income tax rate.
The Company regularly assesses the likelihood of additional tax assessments by jurisdiction and, if necessary, adjusts its reserve for UTBs based on new information or developments. Of the UTB balance at December 31, 2025, $4.6 million was recorded as a reduction to the Company’s deferred tax assets. The remaining $6.1 million of the UTB balance at December 31, 2025 was recorded to long-term income taxes payable within other liabilities on the consolidated balance sheet and relates to both the utilization of tax credits and filing positions. Any potential deficiency would not result in a tax liability, therefore, no interest or penalties were recognized in income tax expense for the years ended December 31, 2025, 2024 and 2023 for positions recorded to the Company’s deferred tax assets and long-term income taxes payable.
The Company is currently subject to audit by the U.S. Internal Revenue Service, or IRS, for the years 2019 through 2024, and state tax jurisdictions for the years 2018 through 2024. However, the IRS or states may still examine and adjust an NOL arising from a closed year to the extent it is utilized in a year that remains subject to audit. The Company’s previously filed income tax returns are not presently under audit by the IRS. The Company is involved in state audits for the years 2020 through 2024.
As of December 31, 2025 and 2024, less than $0.1 million and $0.7 million, respectively, of current income taxes payable were recorded to other accrued operating expenses within the accrued expenses line item of the consolidated balance sheets.
The Company’s cash taxes paid, net of refunds, for the year ended December 31, 2025 is summarized as follows (in thousands):
| Cash Paid (Refunded) for Income Taxes | ||||||||
| Federal | $ | 6,730 | ||||||
| State and local: | ||||||||
| California | (904) | |||||||
| Other states and local | 3,127 | |||||||
| Total state and local | 2,223 | |||||||
| Foreign | 60 | |||||||
| Total cash paid for income taxes, net of refunds | $ | 9,013 | ||||||
The Company’s cash taxes paid, net of refunds, for the years ended December 31, 2024 and 2023 were $11.0 million and $4.4 million, respectively.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Feb 26, 2026 | Showing above |
| 2024 | Feb 27, 2025 | |
| 2023 | Feb 29, 2024 | |
| 2022 | Feb 28, 2023 | |
| 2021 | Feb 28, 2022 | |
| 2020 | Mar 1, 2021 | |
| 2019 | Feb 21, 2020 | |
| 2018 | Feb 28, 2019 | |
| 2017 | Feb 28, 2018 | |
| 2016 | Mar 1, 2017 | |
| 2015 | Feb 25, 2016 | |
About Income Taxes Disclosures
The income tax disclosure reveals how much a company actually pays in taxes versus what the statutory rate would predict. Analysts focus on the effective tax rate (ETR) reconciliation, which breaks down every item driving the gap between the 21% federal rate and the company's reported ETR — including R&D credits, foreign rate differentials, and state taxes. Deferred tax assets (DTAs) and their valuation allowances signal management's confidence in future profitability: a rising allowance suggests the company doubts it can use accumulated tax benefits. Uncertain tax benefit (UTB) reserves quantify exposure to IRS challenges on aggressive positions.
Key signals to watch: sudden ETR drops without clear operational reasons, large increases in valuation allowances, growing UTB balances, and significant unremitted foreign earnings. Post-TCJA, pay attention to GILTI and BEAT provisions that affect multinational tax structures. Compare the cash taxes paid (from the cash flow statement) against the income tax provision to gauge earnings quality.