Conference Call Tomorrow Morning at 8:30 a.m. ET
CHASKA, Minn., Aug. 26, 2024 (GLOBE NEWSWIRE) -- Lifecore Biomedical, Inc. (NASDAQ:LFCR) ("Lifecore" or the "Company"), a fully integrated contract development and manufacturing organization ("CDMO"), today announced its financial results for the fourth quarter and full year of fiscal 2024.
Highlights from Fiscal 2024:
"Operationally, fiscal 2024 was a strong year for the Company as we recorded $128.3 million in revenues, representing a 24.2% increase over fiscal 2023," stated Paul Josephs, president & chief executive officer of Lifecore. "We are exceedingly pleased with this performance and top line growth. I am proud of the progress made by the Company to overcome its recent challenges and very pleased to have submitted our fiscal 2024 10-K today, bringing us current with all SEC filings.
"During my first 90 days as chief executive officer, I have been evaluating all aspects of the organization in an effort to identify opportunities to optimize processes, reduce operating expenses, and enhance productivity. Following my initial operational review, it was clear that the Company's headcount was oversized for its current business. While such decisions are difficult, a reduction in force was required, which we executed in July. We are now confident that we are right sized for our current pipeline as well as near-term growth. With respect to capabilities and capacity, the Company currently expects its new 5-head isolator filler to be GMP-ready in September.
"Looking ahead, a primary focus is the financial growth of our organization. We expect to accomplish this by focusing on three key areas (1) maximizing our base business; (2) advancing our development portfolio towards commercialization; and, (3) attracting new business spanning our complete range of capabilities and services. We believe we can accomplish this while maintaining superior support for the growing needs of our existing customers. Leaning on my extensive experience building and executing commercial strategies at multiple CDMO's, I am leading the team in refining our business development strategy to expand our visibility, broaden our outreach, and ultimately, increase our new project pipeline. We believe Lifecore's key differentiators are the robustness of our quality management system, our decades of proven experience, and our unique ability to handle complex and viscous formulations. I'm confident that, as other potential partners become aware of these capabilities, they will discover the exceptional value that we offer to them and their patients."
Fiscal Fourth Quarter 2024 Financial Highlights
Revenue of $37.9 million, an increase of 21.6% year-over-year.
Gross profit of $17.3 million, an increase of $9.5 million, or 122.0% year-over-year.
Net loss from continuing operations of $7.1 million, as compared to $37.0 million year-over-year, which includes $23.7 million in loss on debt extinguishment in the prior year period.
Adjusted EBITDA of $10.4 million, which excludes $1.6 million of stock-based compensation, as compared to Adjusted EBITDA of $3.7 million, which excludes $0.8 million in stock-based compensation.
Fiscal Year 2024 Financial Highlights
Revenue of $128.3 million, an increase of 24.2% year-over-year.
Gross profit of $41.9 million, an increase of $13.9 million, or 49.5% year-over-year.
Net income from continuing operations of $9.3 million, which includes a $39.5 million decrease in the fair value of the debt derivative liability, as compared to a net loss from continuing operations of $64.2 million year-over-year, which includes $23.7 million in loss on debt extinguishment in the prior year period.
Adjusted EBITDA of $20.2 million, which excludes $6.2 million of stock-based compensation, as compared to Adjusted EBITDA of $11.1 million, which excludes $3.6 million in stock-based compensation.
Corporate Developments
New Business
The Lifecore business development team continued to engage with potential and existing customers to promote expanded capacity and field site visits along with opportunities directed toward utilization of isolator capabilities with virtual to large pharma as well as closing development services programs.
Lifecore has added resources to our business development team and increased our marketing spend to expand our reach into key pharmaceutical and biotech regions. Furthermore, we are addressing our organizational structure to maximize the focus on driving new and impactful opportunities into the company.
Capabilities and Capacity
Lifecore's 5-head isolator filler is expected to be GMP-ready in September 2024. The addition of this 5-head isolator filler represents more than a doubling of Lifecore's current theoretical capacity and represents a significant portion of the previously disclosed 70 million units in theoretical capacity.
Consolidated Fiscal Fourth Quarter 2024 Results
(Unaudited and in thousands, except per-share data)
Three Months Ended
Change
May 26, 2024
May 28, 2023
Amount
%
Revenues
$
37,886
$
31,146
$
6,740
21.6
%
Gross profit
$
17,272
$
7,779
$
9,493
122.0
%
Net loss from continuing operations
$
(7,085
)
$
(36,998
)
$
29,913
80.9
%
Adjusted EBITDA
$
10,412
$
3,717
$
6,695
180.1
%
Fiscal fourth quarter 2024 revenue increased $6.7 million year-over-year to $37.9 million, representing an increase of 21.6% as compared to the prior year period. Revenue growth was primarily driven by a 21.2% increase in its hyaluronic acid (HA) raw material manufacturing (fermentation) business and a 21.8% increase in its CDMO business. The increase in HA raw material manufacturing revenue was primarily due to the higher demand in the current year from existing customers. The increase in CDMO revenues was primarily due to an increase in development services, a new commercial launch in the second quarter of fiscal 2024 and the positive impact of revised contract negotiations on legacy products.
Fiscal fourth quarter 2024 gross profit increased $9.5 million or 122.0% to $17.3 million, as compared to $7.8 million in the prior year period, primarily due to a favorable volume increase, resulting in an increase in gross profits of $1.5 million and favorable rate increases, resulting in an increase of gross profits of $8.0 million. The favorable rate increase was primarily due to a favorable revenue mix with stronger development services revenue and the positive impact of revised contract negotiations on legacy commercial products. This resulted in a gross profit margin improvement by 2060 basis points ("bps") to 45.6%, as compared to 25.0% in the prior year period.
Fiscal fourth quarter 2024 net loss from continuing operations was $7.1 million, compared to net loss from continuing operations of $37.0 million in the prior year period, which included a loss on debt extinguishment of $23.7 million due to the refinancing of the term debt to a related party. Adjusted EBITDA increased $6.7 million or 180.1% to $10.4 million, which excludes $1.6 million of stock-based compensation expense, as compared to adjusted EBITDA of $3.7 million in the prior year period, which excludes $0.8 million of stock-based compensation expense.
Consolidated Full Year Fiscal 2024 Results
(Unaudited and in thousands, except per-share data)
Twelve Months Ended
Change
May 26, 2024
May 28, 2023
Amount
%
Revenues
$
128,261
$
103,269
$
24,992
24.2
%
Gross profit
$
41,850
$
27,985
$
13,865
49.5
%
Net income (loss) from continuing operations
$
9,331
$
(64,236
)
$
73,567
(114.5
)%
Adjusted EBITDA
$
20,206
$
11,091
$
9,115
82.2
%
Full year fiscal 2024 revenue increased $25.0 million year-over-year to $128.3 million, representing an increase of 24.2% as compared to the prior year period. Revenue growth was primarily driven by a 18% increase in its HA raw material manufacturing (fermentation) business and a 27% increase in its CDMO business. The increase in HA raw material manufacturing revenue was primarily due to the higher demand in the current year from existing customers. The increase in CDMO revenues was primarily due to the previously announced commercialization of a new product in the second quarter of fiscal 2024, increased demand from existing customers, price increases from amended commercial agreements at the beginning of the calendar year and a modest increase in development services projects.
Full year fiscal 2024 gross profit increased $13.9 million or 49.5% to $41.9 million, as compared to $28.0 million in the prior year period, primarily due to increased revenues resulting in a favorable volume variance of $6.8 million and favorable rate variance of $7.1 million due to a favorable revenue mix and adjustments to write down inventories to their net realizable value in the comparable periods. Gross profit margin increased 553 basis points to 32.6% in fiscal year 2024 from 27.1% in the prior year period primarily due to a favorable revenue mix, increased customer pricing on amended commercial agreements and an increase due to adjustments to write down inventories to their net realizable value in the prior year comparable period.
Full year fiscal 2024 net income from continuing operations was $9.3 million, which reflected a favorable $39.5 million non-cash fair market value adjustment to the debt derivative liability which is included in other income, compared to net loss from continuing operations of $64.2 million in the prior year period, which included a loss on debt refinancing of $23.7 million. Adjusted EBITDA increased $9.1 million or 82.2% to $20.2 million, which excluded $6.2 million of stock-based compensation expense, as compared to adjusted EBITDA of $11.1 million in the prior year period, which excluded $3.6 million of stock-based compensation expense.
Fiscal 2024 Cash Flow & Balance Sheet
Cash used in operating activities was $0.2 million for the fiscal year ended May 26, 2024 compared to $17.4 million used in the prior fiscal year ended May 28, 2023. Cash used by investing activities was $17.9 million compared to $4.8 million used in the prior year period, which included $16.7 million of proceeds from the sale of a divested business. Capital expenditures were $17.9 million for the fiscal year ended May 26, 2024 compared to $21.5 million in the prior year period, and were primarily focused on investing in Lifecore's long-term growth initiatives. Cash provided by financing activities was $7.5 million for the fiscal year ended May 26, 2024 compared to $39.7 million provided in the prior year period, which included $42.9 million of proceeds from preferred and common stock issuances.
Net term and revolver debt at the end of fiscal year 2024 was $175.2 million, including $8.5 million of cash.
Fiscal 2025 Outlook
The Company is providing guidance on a consolidated basis for full year fiscal 2025.
Revenue: Expected to be in the range of $126.5 million to $130 million
Adjusted EBITDA: Expected to be in the range of $19 million to $21 million. As noted above, the Company has changed its presentation of adjusted EBITDA to exclude stock-based compensation expense, which is anticipated to be in the range of $9.0 million to $10.0 million during fiscal 2025.
Capital expenditures: Expected to be in the range of $10 million to $14 million, excluding capitalized interest.
Sets Date for Conference Call
Lifecore Biomedical will host a conference call tomorrow morning, August 27, 2024, at 8:30 a.m. ET to discuss fiscal 2024 fourth quarter financial results. To participate in the conference call via telephone, dial toll-free: 1-877-407-3982 (U.S.) or 1-201-493-6780 (International). A replay of the call will be available through September 3, 2024, by calling toll-free: 1-844-512-2921 (U.S.) or 1-412-317-6671 (International) and entering code 13748493.
A live webcast of the call can be accessed via Lifecore's investor website on the Investor Events & Presentations page at: https://ir.lifecore.com/events-presentations. An archived version of the webcast will be available on the website for 30 days.
About Lifecore Biomedical
Lifecore Biomedical, Inc. is a fully integrated contract development and manufacturing organization (CDMO) that offers highly differentiated capabilities in the development, fill and finish of sterile injectable pharmaceutical products in syringes, vials and cartridges, including complex formulations. As a leading manufacturer of premium, injectable-grade hyaluronic acid, Lifecore brings more than 40 years of expertise as a partner for global and emerging biopharmaceutical and biotechnology companies across multiple therapeutic categories to bring their innovations to market. For more information about the Company, visit Lifecore's website at www.lifecore.com.
Non-GAAP Financial Information
This press release contains non-GAAP financial information, including Adjusted EBITDA. The Company has included a reconciliation of Adjusted EBITDA to Net (loss) income, the most directly comparable financial measure calculated in accordance with GAAP. See the section entitled "Non-GAAP Financial Information and Reconciliations" in this release for the Company's definition of Adjusted EBITDA.
The Company has disclosed these non-GAAP financial measures to supplement its consolidated financial statements presented in accordance with GAAP. These non-GAAP financial measures exclude/include certain items that are included in the Company's results reported in accordance with GAAP. Management believes these non-GAAP financial measures provide useful additional information to investors about trends in the Company's operations and are useful for period-over-period comparisons. These non-GAAP financial measures should not be considered in isolation or as a substitute for the comparable GAAP measures. In addition, these non-GAAP financial measures may not be the same as similar measures provided by other companies due to the potential differences in methods of calculation and items being excluded/included. These non-GAAP financial measures should be read in conjunction with the Company's consolidated financial statements presented in accordance with GAAP.
Important Cautions Regarding Forward-Looking Statements
This press release contains forward-looking statements regarding future events and our future results that are subject to the safe harbor created under the Private Securities Litigation Reform Act of 1995 and other safe harbors under the Securities Act of 1933 and the Securities Exchange Act of 1934. Words such as "anticipate", "estimate", "expect", "project", "plan", "intend", "believe", "may", "might", "will", "should", "can have", "likely" and similar expressions are used to identify forward-looking statements. In addition, all statements regarding our preliminary estimates of historical financial data for the Historical Periods, current operating and financial expectations in light of historical results, anticipated capacity and utilization, anticipated liquidity, and anticipated future customer relationships usage are forward-looking statements. All forward-looking statements involve certain risks and uncertainties that could cause actual results to differ materially, including such factors among others, as the outcome of any evaluation of the Company's strategic alternatives or any discussions with any potential bidders related thereto, the competition of the Company's financial closing procedures, the Company's ability to successfully enact its business strategies, including with respect to installation, capacity generation and its ability to attract demand for its services, the Company's ability to become current with its reports with the Securities and Exchange Commission (the "SEC"), and the timing thereof, the Company's ability to regain compliance with applicable listing standards under Nasdaq, and its ability expand its relationship with its existing customers or attract new customers, the impact of inflation on the Company's business and financial condition, indications of a change in the market cycles in the CDMO market; changes in business conditions and general economic conditions both domestically and globally including rising interest rates and fluctuation in foreign currency exchange rates, access to capital; and other risk factors set forth from time to time in the Company's SEC filings, including, but not limited to, the Annual Report on Form 10-K for the year ended May 26, 2024 (the "2024 10-K"). For additional information about factors that could cause actual results to differ materially from those described in the forward-looking statements, please refer to our filings with the Securities and Exchange Commission, including the risk factors contained in the 2024 10-K. Forward-looking statements represent management's current expectations as of the date hereof and are inherently uncertain. Except as required by law, we do not undertake any obligation to update forward-looking statements made by us to reflect subsequent events or circumstances.
Lifecore Biomedical, Inc. Contact Information:
Stephanie Diaz (Investors)Vida Strategic
Tim Brons (Media)Vida Strategic
LIFECORE BIOMEDICAL, INC.CONSOLIDATED CONDENSED BALANCE SHEETS(In thousands, except par value)
May 26, 2024
May 28, 2023
ASSETS
Current Assets:
Cash
$
8,462
$
19,091
Accounts receivable, less allowance for credit losses
20,343
19,907
Accounts receivable, related party
10,810
9,117
Inventories, net
39,979
40,841
Prepaid expenses and other current assets
1,439
4,919
Total Current Assets
81,033
93,875
Property and equipment, net
148,598
134,390
Operating lease right-of-use assets
2,442
4,282
Goodwill
13,881
13,881
Intangible assets
4,200
4,200
Other long-term assets
3,806
2,917
Total Assets
$
253,960
$
253,545
LIABILITIES, CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS' EQUITY (DEFICIT)
Current Liabilities:
Accounts payable
$
16,334
$
22,097
Accrued compensation
5,533
4,145
Other accrued liabilities
9,986
7,142
Current portion of lease liabilities
4,133
1,270
Deferred revenues
1,088
552
Deferred revenues, related party
1,025
3,503
Current portion of long-term debt, net, related party
773
580
Total Current Liabilities
38,872
39,289
Long-term debt, less current portion, net, related party
100,819
84,256
Revolving credit facility
19,691
16,809
Debt derivative liability, related party
25,400
64,900
Long-term lease liabilities, less current portion
4,944
9,709
Deferred taxes, net
543
380
Deferred revenues, less current portion, related party
4,703
2,940
Other non-current liabilities
5,086
174
Total Liabilities
200,058
218,457
Series A Convertible Preferred stock, $0.001 par value; 2,000 shares authorized; 43 and 39 shares issued and outstanding at May 26, 2024 and May 28, 2023, respectively
42,587
39,318
Stockholders' Equity:
Common stock, $0.001 par value; 50,000 shares authorized; 30,547 and 30,322 shares issued and outstanding at May 26, 2024 and May 28, 2023, respectively
30
30
Additional paid-in capital
177,808
174,276
Accumulated deficit
(166,523
)
(178,536
)
Total Stockholders' Equity (Deficit)
11,315
(4,230
)
Total Liabilities, Convertible Preferred Stock and Stockholders' Equity
$
253,960
$
253,545
LIFECORE BIOMEDICAL, INC.CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)(In thousands, except per share amounts)
Year Ended
May 26, 2024
May 28, 2023
May 29, 2022
Revenues
$
77,674
$
99,247
$
111,270
Revenues, related party
50,587
4,022
—
Total revenues
128,261
103,269
111,270
Cost of goods sold
86,411
75,284
72,204
Gross profit
41,850
27,985
39,066
Operating costs and expenses:
Research and development
8,575
8,736
7,839
Selling, general and administrative
40,463
38,969
34,659
Gain on sale of divested business
—
(2,108
)
—
Restructuring costs
1,656
4,184
8,359
Total operating costs and expenses
50,694
49,781
50,857
Operating loss
(8,844
)
(21,796
)
(11,791
)
Interest expense, net
