MIAMI - DOMA Perpetual Capital Management LLC has publicly addressed the Board of Directors of Pacira Biosciences (NYSE:PCRX), advocating for a more aggressive approach to stock repurchases. In a letter issued on September 24, DOMA, which controls approximately 4% of Pacira's stock, criticized the Board's capital allocation strategy and M&A track record, urging the company to leverage its $400 million cash balance to enhance shareholder value.
DOMA's correspondence, which was made public on September 25, suggests that the current cash reserves represent an inefficient use of capital, accounting for nearly 59% of Pacira's market cap. The asset management firm is pushing for the completion of the already approved $150 million buyback before the Q3 earnings release this year, followed by an additional $300 million repurchase plan to be approved in Q4. The intent is to buy back roughly 12 million shares by the end of the year, potentially reducing the share count by 35%.
The letter points out that the NOPAIN Act's implementation is expected to drive significant growth in both revenue and earnings for Pacira, particularly through increased Medicare coverage for Exparel, the company's non-opioid pain management drug. DOMA is optimistic about the outcome of Pacira's ongoing patent litigation, contrary to the pessimism reflected in the current stock price.
DOMA also highlights the potential for private insurance coverage to follow Medicare's lead, which could further accelerate revenue and EPS growth. They express confidence in the company's intellectual property, evidenced by recent stock purchases by Pacira's CEO and Board members, and suggest that the current legal situation presents an opportunity for a substantial return to shareholders.
The letter concludes by urging Pacira's Board to act decisively to capitalize on what DOMA perceives as an undervalued stock price. They emphasize the urgency of completing the approved stock buyback and initiating a larger repurchase program to take advantage of the current market conditions.
This call to action is based on DOMA's analysis and represents their position as a significant shareholder. The information in this article is derived from the press release statement issued by DOMA Perpetual.
In other recent news, Pacira Pharmaceuticals (NASDAQ:PCRX) had its Q1 2024 revenue reported at $149 million, with Exparel contributing $118 million. The company also launched a private placement of $250 million in convertible senior notes due in 2029, projected to yield net proceeds of approximately $242 million. In addition, the company's price target was raised by Jefferies due to the anticipation of increased estimations led by the volume acceleration of NOPAIN, a product of Pacira Pharmaceuticals.
On the other hand, the company faced a series of downgrades from firms like H.C. Wainwright, RBC Capital, Raymond James, and Piper Sandler following a legal setback over its drug Exparel. Notably, RBC Capital downgraded Pacira Pharmaceuticals stock from Outperform to Sector Perform, significantly reducing the price target to $14 from the previous $37.
In board-related developments, Pacira BioSciences decided to retain Ms. Laura Brege as a Class I director despite a majority of "withhold" votes in the 2024 Annual Meeting of Stockholders. These are just a few of the recent developments that have shaped the trajectory of Pacira Pharmaceuticals.
InvestingPro Insights
DOMA Perpetual Capital Management LLC's advocacy for an aggressive stock buyback by Pacira Biosciences aligns with recent activities within the company. According to InvestingPro Tips, Pacira's management has indeed been actively repurchasing shares, signaling confidence in the intrinsic value of the company. This is corroborated by the fact that the company's net income is expected to grow this year, which could justify the optimism surrounding the stock's potential upside.
The recent performance metrics from InvestingPro Data further highlight the company's financial position. Pacira Biosciences has a market capitalization of approximately $655.93 million, and its price-to-earnings (P/E) ratio stands at a reasonable 10.55, with a slightly lower forward P/E ratio of 10.2. This valuation metric suggests that the stock might be attractively priced relative to its earnings. Additionally, the company's revenue growth over the last twelve months was 3.15%, indicating a steady increase in its financial performance.
It's also worth noting that despite the stock price's significant decline over the past three months, with a 49.75% drop in the three-month price total return, Pacira maintains a robust gross profit margin of 62.99%. This suggests that the company is efficient in its operations, retaining a large percentage of revenue as gross profit.
Investors interested in more insights and detailed analysis can find additional InvestingPro Tips related to Pacira Biosciences at https://www.investing.com/pro/PCRX, which includes a total of 9 tips that could help in making informed investment decisions.
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