CHASKA, Minn., Aug. 31, 2023 (GLOBE NEWSWIRE) -- Lifecore Biomedical, Inc. (Nasdaq: LFCR) (“Lifecore” or the “Company”), a fully integrated contract development and manufacturing organization (“CDMO”), reported results for the fiscal 2023 fourth quarter and full year ended May 28, 2023.
CEO COMMENTS:
James G. Hall, President and Chief Executive Officer of Lifecore, commented, "We completed a very busy fourth quarter finalizing our transition to a stand-alone life sciences company with the final divestitures of the Curation Foods segment, strong growth in our development portfolio, and the comprehensive strategic refinancing and expanded supply agreement with our key customer Alcon. Our entire organization is now aligned toward a common goal of expanding Lifecore's position as a leading, fully integrated CDMO that offers highly differentiated capabilities in the development, fill and finish of complex sterile injectable pharmaceutical products in syringes and vials and injectable grade Hyaluronic Acid ("HA")."
Mr. Hall continued, "We advanced our development portfolio in the fiscal fourth quarter with the addition of five projects affiliated with five new customers, which demonstrates the impact that our expanded commercial strategy and targeted sales approach is having on our opportunity pipeline. Concurrently, we are preparing our organization for the significant anticipated growth embedded in our portfolio, both in terms of capacity and people. To that end, our multi-use fillers remain on track for delivery in the coming months which will allow us to double our theoretical filling capacity to approximately 45 million units and put Lifecore in a great position to meet market needs and optimize our production across our manufacturing footprint. We also invested in our HA fermentation capacity during the fourth quarter and are in the process of moving from a single-shift fermentation production staff to a full 24/7 staffing model, which we expect will increase our sterile HA capacity by up to 50% by June 2024, allowing us to fulfill the increased HA volume orders associated with our expanded demand."
"Looking ahead to our fiscal 2024 first quarter, our commercial momentum has continued, and we will add several new projects to our development portfolio for the period ended August 27, 2023. We believe this activity will begin to meaningfully contribute to our financial performance in fiscal 2024 second quarter and to a greater degree in the second half of the fiscal year."
LIFECORE FISCAL FOURTH QUARTER 2023 FINANCIAL HIGHLIGHTS:
- Consolidated revenues of $31.5 million, an increase of 12.2% year-over-year.
- Consolidated gross profit of $8.4 million, a decrease of $4.3 million, or 33.9% year-over-year
- Consolidated net loss from continuing operations of $33.8 million, which includes a $23.8 million loss on debt refinancing, $6.8 million of restructuring and other non-recurring charges such as legal expenses, both net of tax, as compared to a net loss from continuing operations of $1.0 million in the prior year period, which included $5.2 million of restructuring and other non-recurring charges, net of tax.
- Consolidated adjusted EBITDA of $3.7 million, compared to $9.1 million in the prior year period.
- Lifecore segment adjusted EBITDA of $6.1 million, compared to $10.7 million in the prior year period, which reflects the timing of shipments to customers; lower development revenue associated with a delay in onboarding new customer projects as well as a higher mix of earlier stage, lower revenue projects; and inflation associated with legacy commercial products.
LIFECORE FISCAL YEAR 2023 FINANCIAL HIGHLIGHTS:
- Consolidated revenues of $103.3 million, a decrease of 7.2% year-over-year.
- Consolidated gross profit of $27.3 million, a decrease of $15.6 million, or 36.4% year-over-year.
- Consolidated net loss from continuing operations of $69.0 million, which includes $20.0 million of restructuring and other non-recurring charges such as legal expenses, both net of tax, as compared to a net loss from continuing operations of $12.0 million in the prior year period, which included $15.8 million of restructuring and other non-recurring charges, net of tax.
- Consolidated adjusted EBITDA of $5.8 million, compared to $22.9 million in the prior year period.
- Lifecore segment adjusted EBITDA of $14.7 million, compared to $30.7 million in the prior year period.
Discontinued Operations
As previously reported, the Company closed on the sales of certain businesses which are now included in discontinued operations including the following:
- December 13, 2021, Curation Foods' fresh packaged salads and vegetables business (the “Eat Smart Disposition”)
- February 7, 2023, Curation Foods' avocado products business (the “Yucatan Disposition”)
- April 6, 2023, Curation Foods' O Olive Oil and Vinegar business (the "O Olive Disposition")
The results of the above dispositions are reflected as discontinued operations in all periods presented within the Company’s financial statements reported herein.
CONSOLIDATED FISCAL FOURTH QUARTER 2023 RESULTS:
Fiscal fourth quarter 2023 results compared to fiscal fourth quarter 2022 are as follows:
| (Unaudited and in thousands, except per-share data) | Three Months Ended | Change | ||||||||||||
| May 28, 2023 | May 29, 2022 | Amount | % | |||||||||||
| Revenues | $ | 31,546 | $ | 28,107 | $ | 3,439 | 12 % | |||||||
| Gross profit | 8,391 | 12,690 | (4,299 | ) | (34)% | |||||||||
| Net loss from continuing operations | (33,795 | ) | (1,010 | ) | (32,785 | ) | (3246)% | |||||||
| Adjusted net income (loss)* | (26,977 | ) | 4,203 | (31,180 | ) | N/M | ||||||||
| Diluted net loss per share | (1.11 | ) | (0.03 | ) | (1.08 | ) | (3600)% | |||||||
| Adjusted diluted net income (loss) per share* | (0.89 | ) | 0.15 | (1.04 | ) | N/M | ||||||||
| EBITDA* | (5,498 | ) | (47,087 | ) | 41,589 | 88 % | ||||||||
| Adjusted EBITDA* | 3,727 | 9,149 | (5,422 | ) | (59)% | |||||||||
* See “Non-GAAP Financial Information” at the end of this release as to how the Company defines these non-GAAP financial measures and for a reconciliation thereof.
Revenues increased $3.4 million year-over-year, which was primarily a result of a $3.9 million increase in Lifecore segment revenues.
Gross profit decreased $4.3 million year-over-year, which was driven by a $5.0 million decrease in the Lifecore segment and a $0.7 million increase in the Curation Foods segment.
Net loss from continuing operations was $33.8 million for fiscal fourth quarter 2023, which includes $6.8 million of restructuring and non-recurring charges, net of taxes, related to consolidating and optimizing operations associated with the Company's strategy to divest its Curation Foods businesses. This compares to a net loss from continuing operations of $1.0 million in the prior year period, which includes $5.2 million of restructuring and non-recurring charges, net of tax, similarly related to consolidating and optimizing its Curation Foods businesses.
SEGMENT RESULTS:
Lifecore Segment:
| (Unaudited and in thousands) | Three Months Ended | Change | Twelve Months Ended | Change | |||||||||||||||||||||
| May 28, 2023 | May 29, 2022 | Amount | % | May 28, 2023 | May 29, 2022 | Amount | % | ||||||||||||||||||
| Revenue: | |||||||||||||||||||||||||
| CDMO | $ | 24,290 | $ | 22,362 | $ | 1,928 | 9 | % | $ | 76,378 | $ | 86,313 | $ | (9,935 | ) | (12 | )% | ||||||||
| Fermentation | 7,256 | 5,251 | 2,005 | 38 | % | 26,891 | 23,007 | 3,884 | 17 | % | |||||||||||||||
| Total revenue | $ | 31,546 | $ | 27,613 | $ | 3,933 | 14 | % | $ | 103,269 | $ | 109,320 | $ | (6,051 | ) | (6 | )% | ||||||||
Lifecore is the Company’s CDMO business focused on product development and manufacturing of sterile injectable products. Lifecore continues to expand its presence in the robust CDMO marketplace by utilizing its specialized capabilities to partner with and provide value-added services to biopharmaceutical and medical device companies. Lifecore continues to seek to drive growth with a focus on building its business development pipeline, maximizing capacity and advancing product commercialization for innovative new therapies that improve patients’ lives.
In the fiscal fourth quarter 2023, Lifecore realized total revenues of $31.5 million, representing an increase of 14.2% as compared to the prior year period, primarily driven by a 38.2% increase in its HA raw material manufacturing (fermentation) business and an 8.6% increase in its CDMO business. The increase in HA raw material manufacturing revenue was primarily due to the higher demand in the current year. The increase in CDMO revenues was primarily due to the timing of customer shipments, as well as a higher mix of earlier phase development projects onboarded at the earlier lower initial revenue stage.
Lifecore's development pipeline in the fourth quarter of fiscal 2023 increased by five to 29 active development programs under contract as of the end of the fiscal 2023 fourth quarter. These projects are delineated as follows: early phase or proof of concept (seven projects), Phase 1 and Phase 2 clinical development (eight projects), and Phase 3 clinical development or scale-up/commercial validation activity (fourteen projects). Lifecore currently manufactures 29 commercial products for 14 clients, which is unchanged from fiscal third quarter 2023.
Curation Foods Segment:
| (Unaudited and in thousands) | Three Months Ended | Change | Twelve Months Ended | Change | ||||||||||||||||||||
| May 28, 2023 | May 29, 2022 | Amount | % | May 28, 2023 | May 29, 2022 | Amount | % | |||||||||||||||||
| Revenue: | ||||||||||||||||||||||||
| Technology | — | 494 | (494 | ) | (100)% | — | 1,910 | (1,910 | ) | (100)% | ||||||||||||||
| Total revenue | $ | — | $ | 494 | $ | (494 | ) | (100)% | $ | — | $ | 1,910 | $ | (1,910 | ) | (100)% | ||||||||
The remaining revenues associated with the Company’s Curation Foods segment relate to the BreatheWay technology operations, which have been divested, and are included in continuing operations within the Company’s financial statements.
CASH FLOW & BALANCE SHEET
Cash used in operations was $34.5 million for the fiscal year ended May 28, 2023 compared to $23.2 million in the prior year period. Cash provided by investing activities decreased $84.1 million compared to the prior year period to $4.2 million used in investing activities in 2023, primarily due to the timing of Curation Foods' businesses dispositions. Capital expenditures were $20.8 million for the fiscal year ended May 28, 2023 which were primarily focused on investing in Lifecore’s long-term growth initiatives. The results for fiscal year 2023 and 2022 included herein reflect adjustments to increase capitalized interest by $2.5 million and $1.8 million, respectively, which have the effect of increasing capital expenditures and reducing interest expense by offsetting amounts for the respective periods. These adjustments remain subject to the completion of the audit of the Company’s financial statements, including with respect to any final adjustments to capitalized interest for those periods. Cash provided by financing activities was $56.1 million for the fiscal year ended May 28, 2023, driven primarily by the previously announced sale of common and convertible preferred stock and proceeds from the debt refinancing.
The Company had cash and cash equivalents of $19.1 million as of May 28, 2023. Total term debt, net of cash, at May 28, 2023, was $147.2 million, consisting of its line of credit, term debt and debt derivative liability associated with the new term debt, compared to $137.2 million in the prior year. With the debt refinancing in the fourth quarter of fiscal year 2023, debt has been characterized as a long-term liability as compared to a current liability in the prior year.
As previously announced, on May 22, 2023, the Company entered into $150 million of new credit arrangements with Alcon, including a six-year credit agreement and a sale and leaseback of certain HA fermentation equipment which replaced its existing term loan. The term facility bears interest at the rate of 10%, which is payable in kind (“PIK”) for the first three years, and payable 3% in cash interest and 7% PIK interest thereafter until maturity. Alcon and the Company also entered into an equipment sale and leaseback transaction related to certain HA fermentation assets, with a lease term of ten years, subject to certain repurchase rights.
CONFERENCE CALL
The live webcast can be accessed via Lifecore's website on the Investor Events & Presentations page. The webcast will be available for 30 days.
Date: Thursday, August 31, 2023
Time: 7:30 a.m. Central time (8:30 a.m. Eastern time)
Webcast link: http://ir.lifecore.com/events-presentations
To participate in the conference call via telephone, dial toll-free: (877) 407-3982 or (201) 493-6780. Please call the conference telephone number 5-10 minutes prior to the start time so the operator can register your name and organization.
A replay of the call will be available through Thursday, September 07, 2023 by calling toll-free: (844) 512-2921 or direct (412) 317-6671, and entering code 13740691.
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 complex sterile injectable pharmaceutical products in syringes and vials. 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 with respects to EBITDA, adjusted EBITDA, Lifecore segment adjusted EBITDA, Curation Foods segment adjusted EBITDA, and Other segment adjusted EBITDA. The Company has included reconciliations of these non-GAAP financial measures to their respective most directly comparable financial measures calculated in accordance with GAAP. See the section entitled “Non-GAAP Financial Information and Reconciliations” in this release for definitions of EBITDA, adjusted EBITDA, Lifecore segment adjusted EBITDA, Curation Foods segment adjusted EBITDA, and Other segment 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. 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 ability of the Company to continue as a going concern, the ability of the Company to conduct its strategic review process in a timely manner or at all, the timing and needs related to capital expenditures, any future relationship between Alcon and the Company, if any, the ability of the Company to conduct its strategic review process in a timely manner or at all, the Company’s ability to successfully complete the transition of the Company’s business and operations to focus on Lifecore, the timing and needs related to capital expenditures, the timing and expenses associated with operations, the ability to achieve acceptance of the Company’s new products in the market place, government regulations affecting our business, the timing of regulatory approvals, uncertainties related to COVID-19 and the impact of our responses to it, and the mix between domestic and international sales. 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 our most recent Quarterly Report on Form 10-Q and Annual Report on Form 10-K/A. Forward-looking statements represent management’s current expectations 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. CONSOLIDATED CONDENSED BALANCE SHEETS (In thousands, except par value) | |||||||
| May 28, 2023 | May 29, 2022 | ||||||
| (Unaudited) | |||||||
| ASSETS | |||||||
| Current Assets: | |||||||
| Cash and cash equivalents | $ | 19,091 | $ | 991 | |||
| Accounts receivable, less allowance for credit losses | 29,708 | 38,836 | |||||
| Inventories | 45,384 | 40,711 | |||||
| Prepaid expenses and other current assets | 5,078 | 5,158 | |||||
| Current assets, discontinued operations | — | 38,016 | |||||
| Total Current Assets | 99,261 | 123,712 | |||||
| Property and equipment, net | 129,671 | 116,441 | |||||
| Operating lease right-of-use assets | 4,922 | 5,646 | |||||
| Goodwill | 13,881 | 13,881 | |||||
| Trademarks/tradenames | 4,200 | 4,200 | |||||
| Other assets | 3,215 | 2,889 | |||||
| Other assets, discontinued operations | — | 12,843 | |||||
| Total Assets | $ | 255,150 | $ | 279,612 | |||
| LIABILITIES AND STOCKHOLDERS’ EQUITY | |||||||
| Current Liabilities: | |||||||
| Accounts payable | $ | 22,144 | $ | 12,952 | |||
| Accrued compensation | 3,921 | 8,941 | |||||
| Other accrued liabilities | 6,900 | 6,847 | |||||
| Current portion of lease liabilities | 1,270 | 4,368 | |||||
| Deferred revenue | 4,055 | 919 | |||||
| Line of credit | — | 40,000 | |||||
| Current portion of long-term debt, net | 488 | 98,178 | |||||
| Current liabilities, discontinued operations | — | 4,605 | |||||
| Total Current Liabilities | 38,778 | 176,810 | |||||
| Long-term debt, net | 101,273 | — | |||||
| Debt derivative liability | 64,500 | ||||||
| Long-term lease liabilities | 9,709 | 7,658 | |||||
| Deferred taxes, net | 373 | 126 | |||||
| Other non-current liabilities | 3,114 | 190 | |||||
| Non-current liabilities, discontinued operations | — | 2,063 | |||||
| Total Liabilities | 217,747 | 186,847 | |||||
| Convertible Preferred stock, $0.001 par value; 2,000 shares authorized; 39 and 0 shares issued and outstanding at May 28, 2023 and May 29, 2022, respectively | 39,245 | — | |||||
| Stockholders’ Equity: | |||||||
| Common stock, $0.001 par value; 50,000 shares authorized; 29,513 and 29,333 shares issued and outstanding at May 28, 2023 and May 29, 2022, respectively | 30 | 30 | |||||
| Additional paid-in capital | 174,349 | 167,352 | |||||
| Accumulated deficit | (176,221 | ) | (74,031 | ) | |||
| Accumulated other comprehensive loss | — | (586 | ) | ||||
| Total Stockholders’ Equity | (1,842 | ) | 92,765 | ||||
| Total Liabilities and Stockholders’ Equity | $ | 255,150 | $ | 279,612 | |||
| LIFECORE BIOMEDICAL, INC. CONSOLIDATED CONDENSED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Unaudited) (In thousands, except per share amounts) | |||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||
| May 28, 2023 | May 29, 2022 | May 28, 2023 | May 29, 2022 | ||||||||||||
| Product sales | $ | 31,546 | $ | 28,107 | $ | 103,269 | $ | 111,230 | |||||||
| Cost of product sales | 23,155 | 15,417 | 75,977 | 68,301 | |||||||||||
| Gross profit | 8,391 | 12,690 | 27,292 | 42,929 | |||||||||||
| Operating costs and expenses: | |||||||||||||||
| Research and development | 2,116 | 2,023 | 8,240 | 7,712 | |||||||||||
| Selling, general and administrative | 11,686 | 9,767 | 43,018 | 35,622 | |||||||||||
| Gain on sale of BreatheWay | — | — | (2,108 | ) | — | ||||||||||
| Restructuring costs | (385 | ) | 1,431 | 4,225 | 8,961 | ||||||||||
| Total operating costs and expenses | 13,417 | 13,221 | 53,375 | 52,295 | |||||||||||
| Operating (loss) income | (5,026 | ) | (531 | ) | (26,083 | ) | (9,366 | ) | |||||||
| Interest income | 15 | 15 | 68 | 81 | |||||||||||
| Interest expense | (4,469 | ) | (1,675 | ) | (18,184 | ) | (15,551 | ) | |||||||
| Transition services income | 203 | 341 | 273 | 5,814 | |||||||||||
| Loss on debt refinancing | (23,774 | ) | — | (23,774 | ) | ||||||||||
| Other (expense) income, net | (521 | ) | — | (1,002 | ) | 641 | |||||||||
| Net (loss) income before tax | (33,572 | ) | (1,850 | ) | (68,702 | ) | (18,381 | ) | |||||||
| Income tax benefit (expense) | (223 | ) | 840 | (301 | ) | 6,431 | |||||||||
| Net (loss) income from continuing operations | $ | (33,795 | ) | $ | (1,010 | ) | $ | (69,003 | ) | $ | (11,950 | ) | |||
| Discontinued operations: | |||||||||||||||
| Loss from discontinued operations | $ | (2,335 | ) | $ | (50,539 | ) | $ | (33,187 | ) | $ | (100,558 | ) | |||
| Income tax benefit (expense) | — | (208 | ) | — | (365 | ) | |||||||||
| Loss from discontinued operations, net of tax | (2,335 | ) | (50,747 | ) | (33,187 | ) | (100,923 | ) | |||||||
| Net loss | $ | (36,130 | ) | $ | (51,757 | ) | $ | (102,190 | ) | $ | (112,873 | ) | |||
| Basic net loss per share: | |||||||||||||||
| Loss from continuing operations | $ | (1.11 | ) | $ | (0.03 | ) | $ | (2.30 | ) | $ | (0.41 | ) | |||
| Loss from discontinued operations | (0.08 | ) | (1.72 | ) | (1.11 | ) | (3.43 | ) | |||||||
| Total basic net (loss) income per share | $ | (1.19 | ) | $ | (1.75 | ) | $ | (3.41 | ) | $ | (3.84 | ) | |||
| Diluted net loss per share | |||||||||||||||
| (Loss) income from continuing operations | $ | (1.11 | ) | $ | (0.03 | ) | $ | (2.30 | ) | $ | (0.41 | ) | |||
| Loss from discontinued operations | (0.08 | ) | (1.72 | ) | (1.11 | ) | (3.43 | ) | |||||||
| Total diluted net loss per share | $ | (1.19 | ) | $ | (1.75 | ) | $ | (3.41 | ) | $ | (3.84 | ) | |||
| Shares used in diluted per share computation | 30,319 | 29,486 | 29,958 | 29,466 | |||||||||||
| LIFECORE BIOMEDICAL, INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited and in thousands) | |||||||
| Twelve Months Ended | |||||||
| May 28, 2023 | May 29, 2022 | ||||||
| Cash flows from operating activities: | |||||||
| Net loss | $ | (102,190 | ) | $ | (112,873 | ) | |
| Adjustments to reconcile net loss to net cash (used in) provided by operating activities: | |||||||
| Depreciation, amortization of intangibles, debt costs and right-of-use assets | 13,508 | 17,884 | |||||
| Loss on debt refinancing | 7,561 | — | |||||
| Stock-based compensation expense | 3,612 | 2,608 | |||||
| Deferred taxes | 351 | (6,990 | ) | ||||
| Net loss (gain) on disposal of property and equipment held and used | 30 | 152 | |||||
| (Gain) loss on disposal of property and equipment related to restructuring, net | — | 5,185 | |||||
| Loss on sale of Eat Smart | — | 336 | |||||
| Gain on sale of BreatheWay | (2,108 | ) | — | ||||
| Loss on sale of Yucatan | 21,096 | — | |||||
| Loss on sale of O Olive | 1,222 | ||||||
| Impairment of indefinite-lived intangible assets and goodwill | 300 | 78,146 | |||||
| Other, net | 86 | (426 | ) | ||||
| Changes in current assets and current liabilities: | |||||||
| Accounts receivable, net | 12,194 | (6,138 | ) | ||||
| Inventories | (13,823 | ) | (5,960 | ) | |||
| Prepaid expenses and other current assets | 2,749 | (602 | ) | ||||
| Accounts payable | 16,085 | 9,343 | |||||
| Accrued compensation | (4,707 | ) | (2,546 | ) | |||
| Other accrued liabilities | 6,440 | (1,346 | ) | ||||
| Deferred revenue | 3,136 | (18 | ) | ||||
| Net cash used in operating activities | (34,458 | ) | (23,245 | ) | |||
| Cash flows from investing activities: | |||||||
| Purchases of property and equipment | (20,763 | ) | (29,940 | ) | |||
| Sale of investment in non-public company | — | 45,100 | |||||
| Proceeds from the sale of Eat Smart, net | 73,500 | ||||||
| Eat Smart sale net working capital adjustments | — | (9,839 | ) | ||||
| Proceeds from sale of BreatheWay, net | 3,135 | — | |||||
| Proceeds from the sale of Yucatan, net | 12,474 | — | |||||
| Proceeds from the Sale of O Olive | 1,001 | ||||||
| Proceeds from sales of property and equipment | — | 1,141 | |||||
| Net cash provided by investing activities | (4,153 | ) | 79,962 | ||||
| Cash flows from financing activities: | |||||||
| Proceeds from sale of common stock, net of issuance costs | 4,822 | — | |||||
| Proceeds from long-term debt | 150,000 | 20,000 | |||||
| Payments on long-term debt | (107,412 | ) | (86,411 | ) | |||
| Payments in connection to debt extinguishment | — | — | |||||
| Proceeds from lines of credit | 31,450 | 55,111 | |||||
| Payments for debt issuance costs | (5,969 | ) | (821 | ) | |||
| Payments on lines of credit | (54,640 | ) | (44,111 | ) | |||
| Taxes paid for employee stock plans | (274 | ) | (789 | ) | |||
| Proceeds from sale of preferred stock, net of issuance costs | 38,082 | — | |||||
| Net cash provided by (used in) financing activities | 56,059 | (57,021 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | 17,448 | (304 | ) | ||||
| Cash and cash equivalents, beginning of period | 1,643 | 1,295 | |||||
| Cash and cash equivalents, end of period | $ | 19,091 | $ | 991 | |||
| Supplemental disclosure of non-cash investing and financing activities: | |||||||
| Purchases of property and equipment on trade vendor credit | $ | 6,945 | $ | 2,260 | |||
| Convertible Preferred Stock PIK dividend | $ | 1,163 | $ | — | |||
| LIFECORE BIOMEDICAL, INC. SEGMENT RESULTS (Unaudited and in thousands) | ||||||||||||||||||||||||||||||
| (Unaudited and in thousands) | Three Months Ended | Change | Twelve Months Ended | Change | ||||||||||||||||||||||||||
| May 28, 2023 | May 29, 2022 | Amount | % | May 28, 2023 | May 29, 2022 | Amount | % | |||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||||||
| Lifecore | $ | 31,546 | $ | 27,613 | $ | 3,933 | 14 | % | $ | 103,269 | $ | 109,320 | $ | (6,051 | ) | (6 | )% | |||||||||||||
| Curation Foods | — | 494 | (494 | ) | (100 | )% | — | 1,910 | (1,910 | ) | (100 | )% | ||||||||||||||||||
| Total revenues | 31,546 | 28,107 | 3,439 | 12 | % | 103,269 | 111,230 | (7,961 | ) | (7 | )% | |||||||||||||||||||
| Gross profit: | ||||||||||||||||||||||||||||||
| Lifecore | 8,394 | 13,361 | (4,967 | ) | (37 | )% | 27,242 | 43,746 | (16,504 | ) | (38 | )% | ||||||||||||||||||
| Curation Foods | (3 | ) | (671 | ) | 668 | 100 | % | 50 | (817 | ) | 867 | (106 | )% | |||||||||||||||||
| Total gross profit | 8,391 | 12,690 | (4,299 | ) | (34 | )% | 27,292 | 42,929 | (15,637 | ) | (36 | )% | ||||||||||||||||||
| Net (loss) income from continuing operations: | ||||||||||||||||||||||||||||||
| Lifecore | 2,780 | 7,165 | (4,385 | ) | (61 | )% | 5,049 | 18,481 | (13,432 | ) | (73 | )% | ||||||||||||||||||
| Curation Foods | (649 | ) | (3,536 | ) | 2,887 | 82 | % | 178 | 1,985 | (1,807 | ) | (91 | )% | |||||||||||||||||
| Other | (35,926 | ) | (4,639 | ) | (31,287 | ) | (674 | )% | (72,162 | ) | (32,416 | ) | (39,746 | ) | (123 | )% | ||||||||||||||
| Total net (loss) income from continuing operations | $ | (33,795 | ) | $ | (1,010 | ) | $ | (32,785 | ) | (3246 | )% | $ | (66,935 | ) | $ | (11,950 | ) | $ | (54,985 | ) | (460 | )% | ||||||||
| Loss from discontinued operations, net of tax: | ||||||||||||||||||||||||||||||
| Curation Foods | (1,641 | ) | (50,747 | ) | 49,106 | 97 | % | (30,564 | ) | (97,882 | ) | 67,318 | 69 | % | ||||||||||||||||
| Other | (694 | ) | — | (694 | ) | N/M | (2,623 | ) | (3,041 | ) | 418 | 14 | % | |||||||||||||||||
| Net loss | $ | (36,130 | ) | $ | (51,757 | ) | $ | 15,627 | 30 | % | $ | (100,122 | ) | $ | (112,873 | ) | $ | 12,751 | 11 | % | ||||||||||
| EBITDA: | ||||||||||||||||||||||||||||||
| Lifecore | $ | 5,332 | $ | 10,621 | $ | (5,289 | ) | (50 | )% | $ | 13,765 | $ | 30,348 | $ | (16,583 | ) | (55 | )% | ||||||||||||
| Curation Foods | (2,108 | ) | (54,486 | ) | 52,378 | 96 | % | (32,976 | ) | (109,338 | ) | 76,362 | 70 | % | ||||||||||||||||
| Other | (8,722 | ) | (3,222 | ) | (5,500 | ) | (171 | )% | (28,425 | ) | (15,708 | ) | (12,717 | ) | (81 | )% | ||||||||||||||
| Total EBITDA | $ | (5,498 | ) | $ | (47,087 | ) | $ | 41,589 | 88 | % | $ | (47,636 | ) | $ | (94,698 | ) | $ | 47,062 | 50 | % | ||||||||||
Non-GAAP Financial Information and Reconciliations
EBITDA and adjusted EBITDA are non-GAAP financial measures. We define EBITDA as earnings before interest, income tax expense (benefit), and depreciation and amortization. We define adjusted EBITDA as EBITDA before certain restructuring and other non-recurring charges. See “Non-GAAP Financial Information” above for further information regarding the Company’s use of non-GAAP financial measures.
| (Unaudited and in thousands) | Three Months Ended | Twelve Months Ended | ||||||||||||||
| May 28, 2023 | May 29, 2022 | May 28, 2023 | May 29, 2022 | |||||||||||||
| Net loss | $ | (36,130 | ) | $ | (51,757 | ) | $ | (100,122 | ) | $ | (112,873 | ) | ||||
| Interest expense, net of interest income | 28,228 | 3,466 | 41,890 | 17,276 | ||||||||||||
| Income tax (benefit) expense | 223 | (840 | ) | 301 | (6,431 | ) | ||||||||||
| Depreciation and amortization | 2,181 | 2,044 | 10,295 | 7,330 | ||||||||||||
| Total EBITDA | $ | (5,498 | ) | $ | (47,087 | ) | $ | (47,636 | ) | $ | (94,698 | ) | ||||
| Restructuring and other non-recurring charges | 6,890 | 5,489 | 20,258 | 16,639 | ||||||||||||
| Impairment of indefinite-lived intangible assets | — | — | — | — | ||||||||||||
| Loss from discontinued operations, net of tax | 2,335 | 50,747 | 33,187 | 100,923 | ||||||||||||
| Total adjusted EBITDA | $ | 3,727 | $ | 9,149 | $ | 5,809 | $ | 22,864 | ||||||||
(1) Includes loss on debt financing of $23.8 million for the fourth quarter and fiscal year ended 2023.
| (Unaudited and in thousands) | Lifecore | Curation Foods | Other | Total | ||||||||||||
| Three months ended May 28, 2023 | ||||||||||||||||
| Net (loss) income | $ | 2,780 | $ | (2,290 | ) | $ | (36,620 | ) | $ | (36,130 | ) | |||||
| Interest expense, net of interest income | (15 | ) | — | 28,243 | 28,228 | |||||||||||
| Income tax (benefit) expense | 552 | 29 | (358 | ) | 223 | |||||||||||
| Depreciation and amortization | 2,015 | 153 | 13 | 2,181 | ||||||||||||
| Total EBITDA | 5,332 | (2,108 | ) | (8,722 | ) | (5,498 | ) | |||||||||
| Restructuring and other non-recurring charges (1) | 751 | 55 | 6,084 | 6,890 | ||||||||||||
| Impairment of indefinite-lived intangible assets | — | — | — | — | ||||||||||||
| Loss from discontinued operations, net of tax | — | 1,641 | 694 | 2,335 | ||||||||||||
| Total adjusted EBITDA | $ | 6,083 | $ | (412 | ) | $ | (1,944 | ) | $ | 3,727 | ||||||
| Twelve months ended May 28, 2023 | ||||||||||||||||
| Net (loss) income | $ | 5,049 | $ | (30,386 | ) | $ | (74,785 | ) | $ | (100,122 | ) | |||||
| Interest expense, net of interest income | (62 | ) | 1 | 41,951 | 41,890 | |||||||||||
| Income tax (benefit) expense | 1,270 | (5,334 | ) | 4,365 | 301 | |||||||||||
| Depreciation and amortization | 7,508 | 2,743 | 44 | 10,295 | ||||||||||||
| Total EBITDA | 13,765 | (32,976 | ) | (28,425 | ) | (47,636 | ) | |||||||||
| Restructuring and other non-recurring charges | 936 | 1,775 | 17,547 | 20,258 | ||||||||||||
| Impairment of indefinite-lived intangible assets | — | — | ||||||||||||||
| Loss from discontinued operations, net of tax | — | 30,564 | 2,623 | 33,187 | ||||||||||||
| Total adjusted EBITDA | $ | 14,701 | $ | (637 | ) | $ | (8,255 | ) | $ | 5,809 | ||||||
| Three Months Ended May 29, 2022 | ||||||||||||||||
| Net (loss) income | $ | 7,165 | $ | (54,283 | ) | $ | (4,639 | ) | $ | (51,757 | ) | |||||
| Interest expense , net of interest income | (15 | ) | — | 3,481 | 3,466 | |||||||||||
| Income tax (benefit) expense | 1,692 | (458 | ) | (2,074 | ) | (840 | ) | |||||||||
| Depreciation and amortization | 1,779 | 255 | 10 | 2,044 | ||||||||||||
| Total EBITDA | 10,621 | (54,486 | ) | (3,222 | ) | (47,087 | ) | |||||||||
| Restructuring and other non-recurring charges | 116 | 3,424 | 1,949 | 5,489 | ||||||||||||
| Loss from discontinued operations, net of tax | — | 50,747 | — | 50,747 | ||||||||||||
| Total adjusted EBITDA | $ | 10,737 | $ | (315 | ) | $ | (1,273 | ) | $ | 9,149 | ||||||
| Twelve Months Ended May 29, 2022 | ||||||||||||||||
| Net (loss) income | $ | 18,481 | $ | (95,897 | ) | $ | (35,457 | ) | $ | (112,873 | ) | |||||
| Interest expense , net of interest income | (72 | ) | 299 | 17,049 | 17,276 | |||||||||||
| Income tax (benefit) expense | 5,266 | (14,317 | ) | 2,620 | (6,431 | ) | ||||||||||
| Depreciation and amortization | 6,673 | 577 | 80 | 7,330 | ||||||||||||
| Total EBITDA | 30,348 | (109,338 | ) | (15,708 | ) | (94,698 | ) | |||||||||
| Restructuring and other non-recurring charges | 387 | 10,364 | 5,888 | 16,639 | ||||||||||||
| Loss from discontinued operations, net of tax | — | 97,882 | 3,041 | 100,923 | ||||||||||||
| Total adjusted EBITDA | $ | 30,735 | $ | (1,092 | ) | $ | (6,779 | ) | $ | 22,864 | ||||||
(1) During fiscal year 2020, the Company announced a restructuring plan to drive enhanced profitability, focus the business on its strategic assets, and redesign the organization to be the appropriate size to compete and thrive. This included a reduction-in-force, a reduction in leased office spaces, and the sale of non-strategic assets. Related to these continued activities, in the fourth quarter of fiscal year 2023, the Company incurred (1) $0.7 million of non-recurring charges primarily related to consolidating and transitioning operations associated with the Yucatan and O Olive Disposition, (2) $2.9 million of restructuring and non-recurring charges, primarily related to legal costs, audit fees and transition costs from corporate headquarters transition to Lifecore, (3) $2.6 million in restructuring costs associated with financial advisor and legal fees related to management of the prior term loan lenders, and (4) $0.7 million in non-recurring charges primary related to one-time expenses incurred in the Lifecore production process.
Contact Information:
Investor Relations
Jeff Sonnek
(646) 277-1263
jeff.sonnek@icrinc.com
