Good day, and thank you for standing by. Welcome to the Q2 2023 Pacira BioSciences, Inc. Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Susan Mesco, Head of Investor Relations. Please go ahead. Thank you, Gerald, good morning, everyone. Welcome to today's conference call to discuss our second quarter 2023 financial results. Joining me on today's call are David Stack, Chairman and Chief Executive Officer, and Charlie Reinhart, Chief Financial Officer. Ron Ellis, Chief Strategy Officer, and Roy Winston, 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 based on current expectations. Such statements represent our judgment as of today and may involve risks and uncertainties. For information concerning risk factors that could affect the company, please refer to the company's filings with the SEC, which are available from the SEC or our website. With that, I will now turn the call over to David Stack. Thank you, Susan. Good morning, everyone, and thank you for joining us. We are entering the second half of the year with positive momentum after seeing a meaningful uptick in year-over-year EXPAREL growth in June and July. In addition, recent data indicate an improving elective surgery market that we believe will continue through the remainder of the year. As the economy moderates and soft tissue elective surgeries come back, we are well-positioned to get back to more robust top-line growth rates. While we are encouraged by improving trends, today, we are adjusting the full year's sales and gross margin guidance to reflect an updated view of market conditions and procedural cadence for the year. Charlie will discuss guidance in greater detail later in the call. In the second half of the year, we will continue to focus on three priorities: growing revenue, improving gross margins, and expanding market access. Second quarter revenues of $169 million include EXPAREL sales of $135 million, driven by solid volume growth and in a slowly recovering market. In addition, we continue to build awareness around ZILRETTA and iovera, with our field-based team now promoting all three of our products. Second quarter, ZILRETTA sales exceeded $29 million, and iovera sales grew to more than $4 million. Our significant top line, combined with ongoing operating discipline, is driving strong and durable cash flows that allow us to further solidify our financial condition by recently prepaying $25 million of outstanding principal under our Term Loan A facility. The second quarter also marks our 25th consecutive quarter of significantly positive adjusted EBITDA of $54 million. We continue to focus on improving gross margins, and we are moving in the right direction, with second-quarter margins improving to 73%. Our San Diego facility is now outperforming volume targets and achieved second-quarter margins of 76% for EXPAREL. We have also made significant improvements in the quality of the 200 liter process in Swindon that we expect will begin to positively impact EXPAREL margins later this year. Bottom line, we believe that the foundation is set for gross margins to return to the high 70% range as we exit 2023. On the regulatory front, we remain on track to submit a supplemental new drug application for our 200 liter facility in San Diego later this year. This will be another critical milestone towards improving EXPAREL gross margins. The FDA recently completed its review of our application for an improved product release assay for EXPAREL and has requested additional information to support an approval. We will submit a meeting request to define the most efficient path forward with the agency. Importantly, this shift in timing does not impact our ability to improve gross margins this year. Turning now to more specifics on the commercial portfolio, starting with our EXPAREL franchise. We are pleased to report that we continue to outperform the broader elective surgery market with second-quarter EXPAREL sales of $135 million, which was essentially flat versus the prior year, as volume growth of 4% was offset by 340B pricing and other discounting. Our investment in these programs has continued to provide meaningful access to EXPAREL for a larger and growing procedure base, setting the stage for a meaningful inflection in the implementation of the NOPAIN Act in 2025. As a reminder, our performance last year was particularly strong, with EXPAREL sales at near record levels, with the second quarter of 2022 being the third highest quarter ever for EXPAREL. Importantly, year-over-year growth rate improved as the second quarter progressed and into July, leaving us optimistic for a higher second half of the year as the market continues to normalize. We also expect that growth initiatives that we have put in place, such as continued volume expansion from 340B and TRICARE reimbursement, as well as initiatives in oral maxillofacial, plastics and outpatient surgeries and sports medicine, will contribute to revenue growth in the second half of this year. Turning to market access, we continue to expand our EXPAREL user base, adding more than 350 first-time purchasing accounts so far this year. We are seeing a growing level of EXPAREL interest among oral and maxillofacial surgeons, fueled by last year's rollout of the partnership with Sevāredent. We expect to launch a similar partnership in the coming months with another large dental support organization with more than 1,000 offices across 46 states. Together, we will support training and education around best practice for optimizing patient recovery after oral surgery using an EXPAREL-based opioid-sparing approach....As expected, our 340B pricing program is continuing, and it's contributing to volume growth in both existing and new business as it helps alleviate cost challenges by offering a reduced price to eligible entities where opioids are often most problematic. For the first half of the year, EXPAREL 340B volumes were roughly 25%, with recent weekly 340B volumes at roughly 20%. Gross to net remains a highly favorable level for our industry at roughly 86%, and we also expect the 340B discount to improve from roughly 28% 25% in the second half of the year, with the 2023 price increase taking effect for government orders, which were which, where pricing runs into with a two-quarter lag. All in all, the 340B program is doing what it was designed to do, expanding the EXPAREL user base and growing volumes within existing and naive businesses. This investment advances our mission to provide an, an opioid alternative to as many patients as possible, regardless of income level or insurance status. 340B is paving the way for us to leverage NOPAIN Act, since we are accessing a significantly larger pool of patients and their surgeon providers who want to perform more outpatient procedures. CMS recently issued their proposed Outpatient Prospective Payment System rule for 2024, with EXPAREL continuing to qualify for separate reimbursement in the ambulatory surgery center under reimbursement code C9290. Their preliminary rule also notes that the agency will implement the NOPAIN Act, which mandates CMS to begin reimbursing separately for non-opioid products for post-surgical pain in all outpatient settings on January 1st, 2025. NOPAIN Act will provide a reimbursement pathway for nearly 20 million EXPAREL relevant market procedures. We expect commercial and self-insured payers to follow the lead of CMS. Reimbursement in the hospital outpatient setting, as well as ambulatory surgery centers, will cover more than 70% of the current total addressable market for EXPAREL. In parallel, we are seeing expanding access to non-opioid pain management for government employees, our military, and their families through efforts like No Pain. In October of this year, TRICARE will adopt the CMS Medicare reimbursement methodology for ambulatory surgery centers and begin providing separate reimbursement for EXPAREL in this setting. We would expect TRICARE to also mirror CMS policy in the hospital outpatient setting with the implementation of No Pain. There are roughly 10 million members enrolled in TRICARE for primary or secondary coverage. Importantly, No Pain, TRICARE, and 340B are especially meaningful to the migration of lower-margin soft tissue procedures to the hospital outpatient settings. These programs will assist eligible healthcare systems in affording the opportunity to offer non-opioid pain control for these populations. Our state-of-the-art training and innovation centers continue to support the market's demand for best practice knowledge transfer to accelerate surgical migration to outpatient sites of care. In the first half of the year, our educational programs provided training in more than 140 on-site and in-field events to more than 4,200 healthcare providers who want to be at the forefront of opioid-sparing pain management. In pediatrics, interest continues to grow as new data are generated. Our commercial organization is focusing on top pediatric institutions, and EXPAREL use continues to significantly expand at influential hospitals such as the Shriner system and Children's Wisconsin. We also have secured several recent wins in spine programs at other centers of excellence, including Cincinnati Children's Hospital, CHOP in Philadelphia, Children's Hospital of Colorado, Mercy Children's in Kansas City, and Seattle Children's. We will look forward to building on our success and to initiating our registration study later this year to support the expansion of EXPAREL label to include patients aged 0 to 6 years. On the regulatory front, we are advancing the FDA review process for our supplemental new drug application to expand the EXPAREL label with a PDUFA action date of November 13th. To remind you, this application is seeking expansion of the EXPAREL label to include 2 key lower extremity nerve block indications that we expect will significantly extend our reach into surgeries of the knee, medial lower leg, foot, and ankle, representing more than 3 million annual procedures. Finally, our phase I study in EXPAREL for intrathecal administration continues and is on track for completion around the end of this year. Switching gears to ZILRETTA and iovera, while our full 200-person field-based team is broadening education and awareness around these complementary and standalone non-opioid solutions for managing osteoarthritis pain. Far this year, the team added more than 270 new first-time purchasing ZILRETTA customers and over 100 new iovera customers. Several milestones are on track for the next year in current and new indications for both products. For ZILRETTA, we expect to initiate two new label expansion studies. These include a shoulder osteoarthritis study and a diabetes safety study in knee osteoarthritis. Importantly, if our shoulder study is successful, ZILRETTA should become the first and only approved corticosteroid specifically for shoulder OA. Both studies will evaluate ZILRETTA versus triamcinolone with the goal of adding a superiority claim to the ZILRETTA label. For iovera, we recently announced our newest partnership with renowned professional golfer, Lexi Thompson, who will, who will be advocating and educating athletes, their families, and fans about non-opioid solutions like iovera. We also have a new broadcast TV commercial that started running last month on the Golf Channel and other select networks to drive viewers to learn more at iovera.com. On the clinical front, we continue to be excited about the prospects for iovera as a potential game changer in spasticity. Last month, Dr. Gerald Francisco from the University of Texas Health Science Center highlighted iovera and cryoneurolysis as promising technologies in his keynote address entitled, "Looking Ahead: Exciting Prospects in Spasticity Management" at the 2023 International Society of Physical and Rehabilitation Medicine Conference. Our registration study of iovera for the treatment of spasticity remains on track to launch later this year. As you know, this is a highly dissatisfied market with inadequate treatment options currently limited to phenol and toxins. Our iovera expansion activities also include a new iovera Smart Tip for medial branch blocks for low back pain, which we expect to have on the market in 2024. Beyond our commercial portfolio, we have an exciting earlier stage portfolio of new product development opportunities that include PCRX-201, a novel intra-articular gene therapy product candidate that produces IL-1RA for osteoarthritis. As you may recall, data from our first phase I study were very encouraging, with the greatest level of efficacy observed at the lowest dose studied. Based on this positive data, we are planning to launch a second phase I study for PCRX-201 and osteoarthritis of the knee. We are currently finalizing our protocol after receiving input from the FDA. We also continue to advance phase I readiness activities for our internal multivesicular liposome pipeline, which includes a multivesicular liposome dexamethasone formulation for low back pain and a multivesicular liposome bupivacaine formulation as a nerve block or field block for longer-lasting chronic pain, where patients are most at risk for becoming addicted to their pain medications. With that, I'd like to turn the call over to Charlie for his financial review. Charlie? Thank you, Dave, and good morning, everyone. To remind you, I will be discussing non-GAAP financial measures this morning. A description of these metrics, along with our reconciliation to GAAP, can be found in the news release we issued this morning. I'll start with an update on sales and margin trends. Starting with EXPAREL, we had a solid second quarter, with net EXPAREL sales coming in at $135.1 million. Second quarter average daily volume growth of 4% was offset by the impacts of our investment in the 340B program and other contracting activities. As Dave mentioned, we were encouraged to see improved year-over-year growth in June and July. These data leave us optimistic the second half of the year will be stronger than the first half of the year. For ZILRETTA, second quarter sales were $29.3 million. With our 200-person field force now promoting education and awareness, we continue to see encouraging uptick in the first-time customers and expect ZILRETTA growth will accelerate over time as the team continues to grow our user base. For iovera, second quarter sales came in at $4.4 million. Here, too, we are seeing strong growth in our customer base and expect demand and sales to gain momentum with the full field-based team generating awareness around the advantages of a drug-free nerve block with iovera. We also expect our sports initiatives with NFL Alumni, the PGA, and the LPGA to drive awareness around iovera as an innovative, opioid-free option for managing pain. Turning to gross margins. On a consolidated basis, our second quarter non-GAAP gross margin% was 73%. This is comprised of non-GAAP gross margins of 72% for EXPAREL, 82% for ZILRETTA, and 78% for iovera. As Dave mentioned, our San Diego facility is performing in line with expectations and achieved EXPAREL margins of 76% for the second quarter. For Swindon, while we've made significant improvements in the 200 liter process at this facility, these changes did not take hold quickly enough to drive a more favorable impact to the overall mix of EXPAREL units sold in the second quarter, with units produced at the higher-cost San Diego 45 liter facility representing a significantly greater proportion of total units sold versus units from the lower-cost Swindon facility. The good news is that the Swindon production is now on track, and we expect to exit the year with margins in the high 70% range as we shift to a more favorable mix of commercial products sold. Turning to expenses, non-GAAP R&D expense for the second quarter was $17.1 million, down from $24.8 million last year. The year-over-year decline primarily relates to the completion of our two lower extremity nerve block studies, which was partially offset by production, development, and capacity expansion costs for the 200 liter facility in San Diego. We expect to see an increase in R&D expense in the back half of the year with the launch of new clinical programs. Non-GAAP SG&A expense came in at $57.1 million, which is in line with the $56.5 million reported last year. We expect to see a decline in SG&A expense in the back half of the year. Second quarter interest expense improved significantly to $3.9 million versus the $8.8 million reported last year. This was driven by the interest expense savings associated with the retirement of our Term Loan B on March 31st, using a new Term Loan A and cash on hand. As you know, the Pacira leadership team is constantly assessing the best use of capital and ways to optimize our balance sheet. To that end, last week, we made a $25 million principal prepayment on the Term Loan A. We continue to fully expect our significant cash, cash flow outlook will enable early retirement of the remaining Term Loan A balance of approximately $122 million. For modeling purposes, the $25 million prepayment will result in interest expense savings of roughly $1 million in the second half of the year. Lastly, despite some challenges, we delivered another quarter of significantly positive adjusted EBITDA of $54.3 million. As for guidance, as noted in today's release, we are updating our full year guidance for the following P&L line items to reflect our current views of market conditions and actual results for the first half of the year. EXPAREL net sales of $550 million-$560 million versus previous guidance of $570 million-$580 million. With respect to cadence, the first quarter of 2023 appears to have shifted away from typical seasonal trends and will represent a slightly higher percentage of the full year than it has historically, similar to 2022, when we had one quarter outlier with the second quarter at near record levels. We now believe the first three quarters of the year will be more evenly balanced in terms of percentage contribution to full year EXPAREL sales. With the market showing signs of normalization and 340B hitting its one-year anniversary in October, we continue to believe that the fourth quarter will be the strongest performer and the largest contributor to full year EXPAREL sales. ZILRETTA net sales of $110 million-$115 million versus previous guidance of $115 million-$125 million. Non-GAAP gross margins of 73%-74% versus previous guidance of 76%-78%, and stock-based compensation of $46 million-$49 million versus previous guidance of $51 million-$54 million. Today, we are also reiterating our full year 2023 guidance for the following: iovera net sales of $17 million-$20 million, non-GAAP R&D expense of $70 million-$80 million, non-GAAP SG&A expense of $220 million-$230 million. In summary, we remain bullish in our five-year plan, with year-over-year top line growth returning to more robust rates as economic conditions improve and the elective surgery market normalizes. Gross margin improving, modest year-over-year increases in operating expenses, and adjusted EBITDA margins that exceed 50%. That concludes our prepared remarks. I'd like to turn the call over to the operator to begin our Q&A session. Operator? Thank you. We will now conduct a question-and-answer session. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. Our first question comes from the line of David Amsellem from Piper Sandler. The line is now yours. Hey, thanks. Just had a few questions. I know you talked about underlying electrosurgical dynamics, but with improvement, I, I guess I would have thought we would see more robust volume growth for EXPAREL, and it doesn't seem to be there. I'm just wondering out loud, is there something else that we're missing on the volume side? Is there something regarding underlying commercial execution that we're missing? And just help enlighten us as to, you know, what is happening here and why EXPAREL seems to be lagging in the overall recovery of the elective surgical space. That's number one. Number two, you talked about margin expansion and operating leverage for a number of years. Here you are guiding down for gross margins. I get your remarks on Swindon. At what point can you take more aggressive measures to deliver on the operating leverage that you've talked about again for a number of years? Is there a sense of accountability that the margin expansion and operating leverage that you've cited in the past just hasn't come to pass yet? I'm wondering if you can give us some thoughts on that. Thank you. Good, good morning, David, and thanks. First, on the first question, you know, as we came into and out of Q2 of this year, April was very soft, David, and actually one of the worst months that we've seen since the pandemic. You know, we saw that that increased as, or the, the market conditions improved, at least related to EXPAREL, as we got into June and July. You know, as we look at commercial execution, I don't believe that there's any issues in the marketplace related to how we're being viewed. I think the marketplace continues to be financially strained, especially in the hospital marketplace. We do talk to folks regularly about the HOPD marketplace and these low-margin, soft tissue procedures that are difficult for the providers to do because of the low-margin aspects of what they're doing. The, you know, trying to move these procedures from the hospital inpatient to the hospital outpatient environment, which is helpful, but still doesn't provide the kind of return that would provide comfort to people who are using 30 minutes of their OR time for a very low return on investment. What I'm trying to point out here is that, you know, the issue here really is-. ... that people are struggling to be able to provide their patients with a low opioid alternative, and we cure that with the institution of the NOPAIN Act. Now, you know, I don't, I don't believe that this is a commercial execution story as much as it is a macro story with customers and patients who are being squeezed, and the cost of a non-opioid treatment therapy is quite a bit different than the ability to use EXPAREL and opioids. Many of our patients are being treated with bupivacaine and opioids purely because either the system or the patient can't afford the more costly non-opioid therapies. Hopefully, that provides some color to Q1. On Q2, all fair comments on your part, David, and, you know, we've struggled. You know, if you go back to the 1st quarter of 2020-2022, our gross margin was in the 79% range, and then we ran into a series of issues that have been well described. We thought we were coming out of those issues, and that we were gonna have some more significant recovery in 2022, and then we had yet another acute issue in Swindon that caused us to improve, but not at the level that we were expecting with the, with the guidance that Charlie just gave. You know, the, the, the lowered guidance is really a conservative measure to make sure that we, that we meet these new milestones. What will happen here over the next, what, several quarters is, you know, the cadence is we have to fix Swindon. I mean, that's number 1. As we sit here today, Science Center is the most reliable material that we produce, but it's also the most expensive. We need to fix Swindon because it's, it's the least costly material that we can make. You know, that is high on the list, and we think that we've achieved that for the most part. We're still. It's not perfect yet, but we've made great progress over the last two months. We will also open the 200 liter facility in San Diego, and that will provide us the opportunity to have significant capacity and again, lower the cost. I think slightly underappreciated is the fact that when those two facilities are running efficiently and we can depend on them, we will close at least one of the 25- or the 45 liter facilities in San Diego, and the cost associated with that, the savings associated with that is material. That's the plan, and that should all happen here. You know, as we get into the first part of 2022 or 2024, we should start to see material that's been produced in these lower cost facilities, and that will enable us to get into this, you know, 80%-ish range that we've been talking about for quite a while. It is also, David, a revenue story, right? I mean, you know, obviously, we need, we need more revenue in order to be able to make more material to have a lower gross margin, that, I think is, is obvious to everybody. That's the cadence of what we're doing here. Okay, thanks. If I, if I might just sneak in a follow-up. Why, why are you continuing to invest significant, further, significantly in iovera? That's an easy one for me, David. iovera, you know, it, to me, remains a opportunity to change patients' lives. When we see what we're doing on the market, and we see the response to how the product is being used in the marketplace, it truly is a game changer. You know, again, we've got to be able to do the studies and provide the data that allows us to have a label that can turn the sales force onto these things. We are seeing real growth in cash market opportunities. We're seeing physicians who are opening iovera only cash, cash pay facilities on the outside of the organization, both in the U.S. and in Europe. We now have spasticity, hospitals who are using iovera. Many of these programs are quite nascent, but real. As we do the spasticity trials, and we think that that trial can be done reasonably quickly, and because it's a device, it can be approved reasonably quickly as a 510(k), that this product in spasticity will be a very important asset for EXPAREL and our share- or for iovera, for the company and for our shareholders, and that is, you know, a 25 event. That's- it's not something that we have to wait a long period of time for. We're seeing, you know, significant interest in the marketplace, not only from physicians, but from societies, and people are starting to really understand the value of cryoneurolysis. I think it's a fair question, clearly on the amount that, you know, how long it's taken us to get going here. But I think that we're in a tipping point with where iovera will start to really change lives and add significantly to the value of Pacira as a company. Thank you. Thanks, David. Thank you. One moment, please. Our next question comes from the line of Gregory Renza of RBC Capital Markets. Please proceed. Great. Good morning, Dave and team. I appreciate all the color, and thanks for taking my questions. Dave, just maybe, maybe for you and, and, and for Charlie, just on the revised guidance. I'm just curious, as you set the full year earlier in the year and leading to where we are now, I know you've acknowledged potentially this tale of, of two halves for the year, but are you and Charlie applying a more cautious methodology? Are there newer inputs that I think are informing the potential predictability? Just walk us through just that process and how you've really incorporated some of the new data points and how it's sort of changed maybe your degree of confidence. Just, Dave, maybe broadly for, for you as you're commenting on, you know, that degree of optimism for the second half of, of the year. Just, just curious, could you just build on that a little bit? Maybe just put the other way, what is your level of concern that, that the disconnect, you know, that you've covered earlier between EXPAREL and the broader market can persist, or, you know, maybe more relevantly, that, that the gap can close and EXPAREL can sort of, you know, certainly outsize in, in growth here? Thanks, thanks so much for the questions. Yeah. No, thank you, Greg. When we, when we set out the annual goal, we were looking at the expectation that procedures would be a 6%-8% growth analysis for the period of the year. What we saw, Greg, was 6% in the first quarter, 4% in the second quarter. The second quarter is where, you know, we start to take a look again, and it's largely an analysis around soft tissue procedures. You know, we've got a lot of data now, Greg, on what the issues are related to patients getting these elective surgeries, especially soft tissue elective surgeries. You know, the impact of, of, of inflation is real, labor is real, mortality as it relates to looking backwards at the patients who expired as a result of, of, of the COVID pandemic. You know, as we're looking forward here, we've taken that 6-8 number down to 4% for the third quarter, and then we make it up in the fourth quarter with something that approaches, you know, the high end of what we originally thought at 8% or in the range of 8%+. As we move into the back half of the year, we do have a number of things that we think will help us close this gap. First is TRICARE. You know, we've got 1 million patients. We are increasingly strong at the military installations themselves. We do see VA business picking up, and, you know, the, the military year closes at the end of September. For SSS and DOD, we should have a strong influence in the third quarter from the military accounts. We also have TRICARE kicking in on December 1st. In the east, that will largely be for EXPAREL. In the west, we expect to have a positive impact across the entire portfolio. You know, that is a relatively strong opportunity for us, located in several states where we are the strongest. There is a allocation of new business coming from those places. The new OMFS site that we or partnership that we cited in the script is a major player, and when we mirror that against the Sevāredent experience, we saw that those organizations, those dental service organizations, have the opportunity to move very quickly to have their members adopt this new strategy and be educated on this new non-opioid strategy. Then, you know, a modest benefit, but a benefit nonetheless from the 340B pricing, which, you know, provides a 1% tailwind for the year and a roughly 3% tailwind as we go into the second half of the year. You know, when we roll those things together, Greg, you know, we're comfortable that we can meet the, the opportunity that we have to get into the $550 range that Charlie talked about between $550 and $560. I hope that answers your question, but please come right back if it doesn't. No, that, that's very helpful, Dave. I appreciate the additional color. Thank you. One moment, please. Our next question comes from the line of Glen Santangelo from Jefferies. Please proceed. Oh, yeah, good morning, thanks for taking my question. Hey, hey, Dave, not, not to beat this EXPAREL horse to death here, but, you know, when I look at the full 6 months sort of coming into this year, I thought we entered the year with you seemingly giving somewhat conservative guidance, and now, you know, you're taking the guidance down mid-year. I appreciate the last couple of months seemingly looks better, but when, when you look at the first half of the year, I mean, what played out differently relative? Bless you. Relative to what you would've thought? Is it just that the pricing dynamic of EXPAREL versus bupivacaine and the opioids is just creating a much larger headwind than you thought? Is that the primary issue here? It sounds like 340B, the volumes there are playing out as expected, and the pricing related to that is kind of as expected. I'm just trying to really figure out what, what, what's gone different relative to what you thought at the beginning of the year? It's, it's really, it's, it's two things, Glen, and you're, you're accurate in your assessment. I mean, 340B has been slightly heavier for the first six months of the year than we anticipated as we came into the year, although, you know, net impact on the bottom line is, is modest. It really is, you know, the discussions we have with customers, and a lot of these are based on our discussions relative to TRICARE and NOPAIN, where, you know, they're the pharmacy is being squeezed is not the right word, but it's the word that comes to mind. I mean, there's demands being made in the hospitals and many of the treatment centers on cost savings and where can they save money relative to, you know, their budgets. What we hear from these folks is that, you know, the CFO and the CEO are less aware of the issues of opioids and consider opioids to be free, actually, because the prescriptions that they write are filled outside the hospital under Part D. There is really no cost to the use of opioids. Our clinicians don't like the way that this is being done, but really have no choice but to use the lowest cost alternative. They're using bupivacaine, and they're supplementing that with opioids as the only treatment option that's available in many treatment centers. We, we've seen that in the past, of course, but I think the pressure on pharmacy and on hospital systems from a cost perspective has been intensified. So, you know, again, another reason why we are so hopeful that, you know, when we get NOPAIN approved, and as we roll TRICARE out there, and as we put 340B in front of folks, that we've got solutions to this cost issue that will allow us to improve patient care and opioid, non-opioid, and offer non-opioid alternatives. But, you know, Glen, we're, we're, you know, we're not massively behind where we thought we were gonna be. We're, we're behind, and we're restating for sure to be conservative, but we think we're in a good spot and relative to everything that's right in front of us with TRICARE, lower extremity nerve block, and NOPAIN as we get into 2025. I, I, I, I appreciate those comments. Now, sort of looking forward, it's, it's, I guess, hard to think that anything changes in the next 18 months. Isn't this all kind of window dressing ahead of NOPAIN Act coming in 2025? Have you started to think about, you know, how much of an impact NOPAIN Act can have in, in 2025? You know, my, my follow-up, and then I'll, then I'll hop off, is, you know, with NOPAIN Act, you know, less than 18 months away, does, does that change, depending upon your view of the opportunity, does that change how you think about capital allocation priorities? Maybe shifting away from business development and maybe focusing on repurchasing some of your own stock here, you know, in the low to mid-30s, just given, you know, the seemingly large opportunity, you know, just 17 months away now? I'll stop there. Sure. No, fair enough, Glenn. We do... We have a very significant product launch around a PDUFA date of lower extremity nerve block on November 13th. That brings another 3 million patients to be under the, the, protection, I guess, of a package insert. It is surprising to us that many of these situations that I just described to your first question are a result of not having a direct package insert that allows our customers, our physician customers, to show to a pharmacist or to a CFO that we have a direct label for a lower extremity nerve block. That's the guise under which many of these access denial programs are built. We cure that with a lower extremity nerve block, and we have some confidence that that will happen in November. That'll be a very important launch later this year and into next year. We also do see that there are some early signs that there is recovery in some of the areas that have caused us some issue, inflation, modestly, labor, modestly, the restocking, if that's not an inappropriate word, for the number of patients who are now acute or chronically ill and having acute soft tissue surgeries as a result of their chronic illness. I, I raise that point because one of the issues that has caused the soft tissue market to be soft is that the patients who would've had many of these soft tissue procedures that we're not seeing, expired during the pandemic. We do believe that, that the market is slowly seeing the recovery of those things coming on, those patients coming back, and we'll be getting more of these soft tissue procedures as we go forward through this year and next year. We don't believe that, that 2024 is a, you know, is, is anything but a year to focus on all of the good things that are going on with lower extremity nerve block and TRICARE. It is also a year to get ready for No Pain. I mean, we are talking to many of our customers about the impact of No Pain and showing them the blended rate of what-- how important No Pain will be to them. I'll give you a specific example. We'll show a hospital that 60% or 70% of their business is outside the hospital and will be totally reimbursed. When we do that, that the average cost of EXPAREL for these accounts is gonna be in the $70 range, which purely that's blended, of course, across all of their sites of care, and that makes it comparative to almost anything that is out there. The other piece of that is when we have NOPAIN, EXPAREL or EXPAREL will be the only zero cost opportunity to treat pain. Even bupivacaine will have a cost that that will be not not appropriate with with EXPAREL. That's the first part. The second part is. We still have a Term Loan A, and we want to retire that using cash. We have a convert that comes due in August of 25. We have the option of using cash or stock, and depending on the share price, you know, you rightly point out that the share price is, in our view, inappropriately low today. We will pay that off as cash to the extent that that's possible, and we continue to believe that that's the best use of cash as we go forward. Those are our 2 priority focuses. We really have put back burner, or slow burner, for the BD opportunity so that we can address those 2 opportunities to delever as we go forward. Thanks for the comments, Dave. Thanks, Glenn. Thank you. One moment, please. Our next call comes from Leszek Sulewski from Truist Securities. Please proceed. k you for taking my questions. Just to go back to EXPAREL, on the 4% volume growth, can you just give us a little bit of a dynamics of what portion of that was on 340B and then the existing channels, how they performed? And then also on trends from 20 ml to the 10 ml lower dosage, any impact on the margin side there? And then perhaps give us the latest on the Paragraph IV filer, and I have a follow-up on ZILRETTA. Thank you Good. Thanks, Les. For 340B, you know, we were, we were running at, you know, something that was approaching 25%. Over the last, I guess probably month and a half now, we've seen that come back to something that's closer to 20%. We think some of the activities that are going on externally outside the company and some of our own internal activities on appropriateness of 340B pricing are having some impact in, in the marketplace. You know, I, I think we're on top of that, Les. I don't think that it's gonna get higher than what we've seen in the past, and I think we have some reason to believe based on our specific discussions with many, many of the people in the marketplace about 340B pricing and some of the activities that are going on in Washington, that 20%, our initial belief of conversion was, was appropriate. It's been slower than we thought, but we are seeing new customers, meaning 340B hospitals who never purchased EXPAREL before, buying EXPAREL or purchasing EXPAREL now. When you look at those accounts, there is a material portion of those, of those purchases that are not being purchased under 340B. There is some benefit to the overall franchise of selling the drug at a discount for a portion of those patients and also having the benefit of those sales outside of 340B pricing. That would be, that would be number one. Margins on 10 ml versus 20 ml, Les, they're about the same. You know, we've taken a couple of price increases on the 10 to try to normalize the procedure value of four days of pain control, so that the 10 ml, obviously, the revenue is lower for a 10 ml versus a 20 ml, but the margin associated with the 10 ml actually works out to be slightly higher than the 20 ml. It's, it's not half. It's, it's better than, than the 20 ml on the same procedure, but the total revenue is, is materially less, if that's an answer to your question. I think that's what you were asking. Then last, a Paragraph IV update is pretty easy. There really is not much. I mean, since we had the Lexman hearings, we really don't have anything new to report to, to the marketplace on, you know, on any activities here. It's just slow-going in terms of what's required in order to meet the demands of a 340B filer are slow to, slow to progress. So, you know, things are sliding backwards as, as, as timelines are not met. Not by us, by the way. Very helpful. Got it. Very helpful. Thank you. On, on the ZILRETTA front, what is the latest progress on moving into specialty pharmacies? What have been some of the adoption trends from naive patients versus those on repeat dosing? I'll stop there. Thank you. Yeah. Oh, thanks again, Les. We are moving towards specialty pharmacy. There's a number of reasons to adopt this. You know, the HA market continues to be unsettled, and especially what we saw in June, where one of the more popular HAs from an ability to generate profit perspective took a pretty good hit on pricing. The market is really cautious, I guess, is the best way to put it, about buying a lot of stock because the price changes every quarter, and if they've got a lot of inventory, they have to try to use it up while they still have the old price, and they don't have a lot of time associated with that. There's some drivers in the marketplace that, frankly, didn't exist before these, these HA issues have taken hold. You know, what we see is, physicians would tell us that they have a lot of resource tied up in prior authorizations and, you know, cash tied up in inventory, and moving to the specialty pharmacy relieves both of those issues, and we can work with them then in some things around, you know, customers who would like to be buy and bill. When you have a product acquisition cost over $500, that's a difficult task for these, especially these small orthopedic procedures. We can, we can operate in, in a different way with the specialty pharmacies than we can with the physician accounts themselves on being able to address the customer needs in this marketplace. This is in progress, Les. You know, I don't think we haven't fully optimized where we're going with already yet, but we expect to achieve that as we get into the later parts of this quarter. Thank you. One moment, please, as I prepare the next question. Our next question comes from the line of Balaji Prasad from Barclays. Please proceed. Hi, good morning. This is Xiao on for Balaji. Thanks for taking our question. In our recent conversation with you back in June, you mentioned that there was a positive structural change in the demand for volumes. How do we reconcile that with the low volume for EXPAREL, EXPAREL with those comments? Thank you. Yeah, what we saw is, you know, I think what we were talking about was that we were seeing strength in the back half of June. That's accurate. We were. Unfortunately, we were coming off a. Well, not unfortunately. I mean, the fact is that April was very soft, and as we got into May, we saw some normalization back to what we thought was going to be the case for the every month in the quarter, and then we saw strengthening in the back half of June. I think that was the reference. So when you blend those things together, you get to what we reported as a 4% procedure increase, and that's the cadence. So both things are true. We did, we did see strengthening in the back half of June, and we had 4% volume growth, but it was, it was a recovery from what was really a very soft April, and then, recovery in May, and then increasing strength as we went into the back half of June. Got it. Very helpful. Thank you. Thanks, Balaji. One moment, please. Our next question comes from the line of Rohit Mahajan from Needham & Company. Please proceed. Hi, this is Rohit on for Serge. Thanks for taking our questions. Why do you think we haven't seen EXPAREL benefit from the improved procedure volumes that we've seen with med tech companies and hospital companies report in the first half of 2023? Then also, can you provide an update on the European launch of EXPAREL and how that's going? Thanks. Sure, sure. Thank you. I'm sorry, I didn't catch your first name. Sorry about that. I mean, the answer is... I'm glad you asked, actually. You know, the only 2 procedures that are growing, and this is true of 2022, and it's also true of the first 6 months of 2023, are foot and ankle. I'm sorry, I'm sorry, Jesus, knees and, knees and hips. And we have participated in that, and our knees and hips, as a growth driver, are in line with what you would have heard from the med tech companies. The issue for us and relative to other ortho procedures like rotator cuff and, you know, foot and ankle and hand and wrist, and things like that, those procedures are also soft enough that actually ortho overall is down. The marketplace for 222, in the first 6 months of 2023, is actually down year-on-year using IQVIA data. That is especially true of soft tissue. The answer to your question, the specific answer to your question is, we are participating in, in hips and knees, mostly knees, by the way. Knees are the primary driver. Hips are growing, those are the only two, as I said earlier. We, we have a, a presence in all of the rest of ortho, which is not growing in line with hips and knees, 45+% of our business is actually in soft tissue, which is not growing at all, in fact, has brackets around it for all of 22. Again, we only have data, our data for IQVIA is on a 6-month lag. We only have January as it comes to this full report of site of care and procedures by site of care. In that report, you can see very, very clearly that hospital procedures are down and soft tissue is down in that environment. Everything's down in that environment, and that soft tissue is down in outpatient environments as well. So it's because our procedure base is much broader than the med tech companies, that we have a slightly different profile as we look at how these procedures are done and how the cadence of procedures are done. So that's, that's the first part. The second part is Europe. Europe has been slower than we thought. You know, they've had a lot of issues around the war and some of the negative implications in Europe of how the importance of, you know, getting new things approved on hospital formularies and things like that. I would tell you that, recently, we've had significant progress. We've had several major medical institutions, approve EXPAREL and iovera, for use in the last 6 weeks. Several spasticity centers of excellence have approved iovera for use in Europe. We've just, in the last 14 days, have won a 52 hospital chain, and a number of major orthopedic hospitals, in Europe, especially in particularly in the UK, but in many other European countries. I would say, you know, we, we have iovera, actually, questions coming to us from a number of places in Europe that we have not staffed with individuals. When folks are going to their national meetings, we're getting the calls, wondering where they can train, where they can travel to, to be trained across Europe on iovera. Of course, that gives us an opportunity to talk to those same folks about EXPAREL. Europe was slow, but I think now we are catching up, and actually, we expected, you know, we're okay in Europe for the next, for the next six months and for the back, you know, and into 2024. I appreciate the question. Thank you. Thank you. Thank you. One moment, please. Our last question comes from the line of Boris Peaker from TD Cowen. Please proceed. Great, thanks for taking my question. First, I just wanna know, bupivacaine has been on the FDA drug shortage list, I think, for a while now. I'm curious, what you're seeing in terms of bupivacaine availability and how that may be impacting EXPAREL? My second question in terms of the lower extremity nerve block: have you discussed with the FDA if you should be expecting an advisory panel on this or not? Thank you. Yeah. Thank you, Boris. You know, our experience with bupivacaine is that it had a much greater impact on the pumps than it had on EXPAREL. The issue, as we see it in our major EXPAREL institutions, is not a bupivacaine shortage, it's a bupivacaine shortage of certain package sizes and certain dosage and certain strengths. What I mean by that is, you know, if they have a protocol, for example, that says that they use 10 cc of 0.25%, but they don't have 0.25%, then what they're concerned about is that there's gonna be inappropriate administration when somebody just grabs bupivacaine and doesn't really take the time to understand that all of the dosage strengths that were previously available are now available. The net-net of that is that I can't tell you that I think there's any material benefit to EXPAREL because of a bupivacaine shortage. In a pharmacy, obviously, they would just grab a different dosage strengths, and frankly, if there is anything they're making under USP 797 in a sterile environment, they would use the cheapest available form in any case, right? It's more the floor stock, and when people are taking stuff out of the, you know, the on-site machines, that they're worried about whether the, whether the nursing staff and the physicians are gonna be able to follow the protocols that are written, because all of the dosage strengths aren't available. On the second piece, we've had some extensive discussions with the FDA, and we do not expect that there was going to be an AdCom. Great, thanks for taking my question. Thanks, Boris. Thank you. At this time, I'm showing no further questions, I would like to turn the conference back to David Stack, Chairman and CEO, for closing remarks. Thank you, Gerald, thanks to all on the call today for your questions and time. We are starting the second half of the year in a positive momentum, and we are excited about the opportunities that are ahead of us. Throughout the balance of the year, we will continue to work to transform the lives of patients who need non-opioid pain management, which is an ongoing plight throughout this country and around the world. Next up for us is the Wedbush Conference in New York. Thank you all, and stay well. Goodbye. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.