Lifecore Biomedical, Inc. De 10-Q for FY2023 Q2

Lifecore Biomedical, Inc. De (LFCR)

10-Q 2023-03-16 For: 2022-11-27

Added on April 12, 2026

About this 10-Q

Lifecore Biomedical, Inc. De filed this 10-Q on March 16, 2023, covering the quarter ended November 27, 2022 (FY2023 Q2).

Headline figures

Quarter ended November 27, 2022, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $38.8M; down 10.7% from $43.45M a year earlier
Net loss: $12.45M; compared with a net loss of $38.44M a year earlier
Diluted EPS: -$0.42; compared with -$1.30 a year earlier

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Delaware			94-3025618
(State or other jurisdiction of incorporation or organization)			(IRS Employer Identification Number)


3515 Lyman Boulevard
Chaska,	Minnesota	55318
(Address of principal executive offices)		(Zip Code)


Title of each class	Trading Symbol	Name of each exchange on which registered
Common stock, par value $0.001 per share	LFCR	The NASDAQ Global Select Market


			Page




Part I.	Financial Information

Item 1.	Financial Statements

	a)	Consolidated Balance Sheets as of November 2 7 , 2022 and May 29, 2022	1

	b)	Consolidated Statements of Comprehensive (Loss) Income for the Three and Six Months Ended November 27 , 2022 and November 28 , 2021	2

	c)	Consolidated Statement of Changes in Stockholders’ Equity for the Three and Six Months Ended November 27, 2022 and November 28, 2021	3

	d)	Consolidated Statements of Cash Flows for the Six Months Ended November 27, 2022 and November 28, 2021	4

	e)	Notes to Consolidated Financial Statements	5

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		24

Item 3.	Quantitative and Qualitative Disclosures About Market Risk		33

Item 4.	Controls and Procedures		33

Part II.	Other Information		35

Item 1.	Legal Proceedings		35

Item 1A.	Risk Factors		35

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		37

Item 3.	Defaults Upon Senior Securities		37

Item 4.	Mine Safety Disclosures		37

Item 5.	Other Information		37

Item 6.	Exhibits		38

	Signatures		39


	November 27, 2022		May 29, 2022
	(unaudited)
ASSETS
Current Assets:
Cash and cash equivalents	$	6,830	$	1,643
Accounts receivable, less allowance for credit losses	35,689		48,172
Inventories	77,524		66,845
Prepaid expenses and other current assets	7,049		7,052

Total Current Assets	127,092		123,712


Property and equipment, net	118,852		118,531
Operating lease right-of-use assets	7,951		8,580
Goodwill	13,881		13,881
Trademarks/tradenames, net	7,400		8,700
Customer relationships, net	1,292		1,400
Other assets	2,605		3,002

Total Assets	$	279,073	$	277,806

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current Liabilities:
Accounts payable	$	27,971	$	15,802
Accrued compensation	4,602		9,238
Other accrued liabilities	10,426		7,647
Current portion of lease liabilities	5,013		5,026
Deferred revenue	731		919
Line of credit	48,000		40,000
Current portion of long-term debt, net	98,953		98,178

Total Current Liabilities	195,696		176,810

Long-term debt, net	—		—
Long-term lease liabilities	8,999		9,983
Deferred taxes, net	10		126
Other non-current liabilities	201		190

Total Liabilities	204,906		187,109

Stockholders’ Equity:
Common stock, $0.001 par value; 50,000 shares authorized; 30,297 and 29,513 shares issued and outstanding at November 27, 2022 and May 29, 2022, respectively	30		30
Additional paid-in capital	174,036		167,352
Retained earnings (accumulated deficit)	(99,899)		(76,099)
Accumulated other comprehensive loss	—		(586)
Total Stockholders’ Equity	74,167		90,697
Total Liabilities and Stockholders’ Equity	$	279,073	$	277,806


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934


	Three Months Ended				Six Months Ended
	November 27, 2022		November 28, 2021		November 27, 2022		November 28, 2021
Product sales	$	38,802	$	43,452	$	82,157	$	85,084
Cost of product sales	31,694		28,737		68,797		59,934
Gross profit	7,108		14,715		13,360		25,150
Operating costs and expenses:
Research and development	2,118		1,856		4,166		3,729
Selling, general and administrative	10,773		8,012		21,435		17,482
Impairment of indefinite-lived intangible assets	1,300		—		1,300		—


Restructuring costs	823		707		1,870		2,541
Total operating costs and expenses	15,014		10,575		28,771		23,752
Operating (loss) income	(7,906)		4,140		(15,411)		1,398

Interest income	16		19		31		46
Interest expense	(4,219)		(3,094)		(7,897)		(9,772)

Other income (expense), net	(336)		79		(515)		188
Net (loss) income before tax	(12,445)		1,144		(23,792)		(8,140)
Income tax (expense) benefit	(4)		3,085		(8)		4,736
Net (loss) income from continuing operations	(12,449)		4,229		(23,800)		(3,404)

Discontinued operations:
Loss from discontinued operations	$	—	$	(42,409)	$	—	$	(44,714)
Income tax (expense) benefit	—		(261)		—		200
Loss from discontinued operations, net of tax	—		(42,670)		—		(44,514)
Net loss	$	(12,449)	$	(38,441)	$	(23,800)	$	(47,918)

Basic net loss per share:
(Loss) income from continuing operations	$	(0.42)	$	0.14	$	(0.80)	$	(0.12)
Loss from discontinued operations	—		(1.45)		—		(1.51)
Total basic net loss per share	$	(0.42)	$	(1.30)	$	(0.80)	$	(1.63)

Diluted net loss per share:
(Loss) income from continuing operations	$	(0.42)	$	0.14	$	(0.80)	$	(0.12)
Loss from discontinued operations	—		(1.45)		—		(1.51)
Total diluted net loss per share	$	(0.42)	$	(1.30)	$	(0.80)	$	(1.63)

Shares used in per share computation:
Basic	29,634		29,471		29,605		29,448
Diluted	29,634		29,471		29,605		29,448

Other comprehensive income, net of tax:
Net unrealized gain on interest rate swaps (net of tax effect of $0, $(100), $(16) and $(190))	$	286	$	176	$	586	$	542
Other comprehensive income, net of tax	286		176		586		542
Total comprehensive loss	$	(12,163)	$	(38,265)	$	(23,214)	$	(47,376)


Three and Six Months Ended November 27, 2022
				Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Common Stock
	Shares	Amount
Balance at May 29, 2022	29,513	$	30	$	167,352	$	(76,099)	$	(586)	$	90,697
Issuance of stock under stock plans, net of shares withheld	80	—		—		—		—		—
Taxes paid by Company for employee stock plans	—	—		(67)		—		—		(67)
Stock-based compensation	—	—		785		—		—		785
Net loss	—	—		—		(11,351)		—		(11,351)
Other comprehensive income, net of tax	—	—		—		—		300		300
Balance at August 28, 2022	29,593	$	30	$	168,070	$	(87,450)	$	(286)	$	80,364
Issuance of stock under stock plans, net of shares withheld	76									—
Taxes paid by Company for employee stock plans				(142)						(142)
Stock-based compensation				1,108						1,108
Net loss						(12,449)				(12,449)
Other comprehensive income, net of tax								286		286
Issuance of shares to Wynnefield Capital, Inc.	628	—		5,000		—		—		5,000
Balance at November 27, 2022	30,297	$	30	$	174,036	$	(99,899)	$	—	$	74,167


Three and Six Months Ended November 28, 2021
				Additional Paid-in Capital		Retained Earnings (Accumulated Deficit)		Accumulated Other Comprehensive Loss		Total Stockholders’ Equity
	Common Stock
	Shares	Amount

Balance at May 30, 2021	29,333	29		165,533		38,580		(1,358)		202,784
Issuance of stock under stock plans, net of shares withheld	129	—		—		—		—		—
Taxes paid by Company for employee stock plans	—	—		(428)		—		—		(428)
Stock-based compensation	—	—		620		—		—		620
Net loss	—	—		—		(9,477)		—		(9,477)
Other comprehensive income, net of tax	—	—		—		—		366		366
Balance at August 29, 2021	29,462	$	29	$	165,725	$	29,103	$	(992)	$	193,865
Issuance of stock under stock plans, net of shares withheld	19	—		—		—		—		—
Taxes paid by Company for employee stock plans	—	—		(84)		—		—		(84)
Stock-based compensation	—	—		686		—		—		686
Net loss	—	—		—		(38,441)		—		(38,441)
Other comprehensive income, net of tax	—	—		—		—		176		176
Balance at November 28, 2021	29,481	$	29	$	166,327	$	(9,338)	$	(816)	$	156,202


(In thousands)	November 27, 2022		May 29, 2022		November 28, 2021		May 30, 2021
Cash and cash equivalents	$	6,830	$	1,643	$	1,091	$	1,159
Cash and cash equivalents, discontinued operations	—		—		—		136


Cash and cash equivalents	$	6,830	$	1,643	$	1,091	$	1,295


	Balance at beginning of period		Provision (benefit) for expected credit losses		Write offs, net of recoveries		Balance at end of period
Six months ended November 27, 2022	$	65	$	—	$	—	$	65
Six months ended November 28, 2021	$	85	$	(14)	$	—	$	71


(In thousands)	AOCL
Balance as of May 29, 2022	$	(586)

Amounts reclassified from OCI	586
Other comprehensive income, net	$	586
Balance as of November 27, 2022	$	—


	Fair Value at November 27, 2022						Fair Value at May 29, 2022
Assets:	Level 1		Level 2		Level 3		Level 1		Level 2		Level 3
Assets held for sale - nonrecurring	$	—	$	—	$	—	$	—	$	—	$	1,027
Current assets, discontinued operation
Assets held for sale - nonrecurring	—		—		—		—		—		—
Property & equipment, as restated	—		—		—		—		3,500		—
Customer relationship, as restated	—		—		—		—		—		1,400
Tradenames, as restated	—		—		—		—		—		4,000
Total assets	—		—		—		—		3,500		6,427


	Three Months Ended				Six Months Ended
(In thousands, except per share amounts)	November 27, 2022		November 28, 2021		November 27, 2022		November 28, 2021
Numerator:
Net loss	$	(12,449)	$	(38,441)	$	(23,800)	$	(47,918)
Denominator:
Weighted average shares for basic net loss per share	29,634		29,471		29,605		29,448
Effect of dilutive securities:
Stock options and restricted stock units	—		—		—		—
Weighted average shares for diluted net loss per share	29,634		29,471		29,605		29,448

Basic and Diluted net loss per share	$	(0.42)	$	(1.30)	$	(0.80)	$	(1.63)


(In thousands)	November 27, 2022		May 29, 2022
Finished goods	$	38,882	$	33,029
Raw materials	26,959		24,221
Work in progress	11,683		9,595
Total	$	77,524	$	66,845


	Three Months Ended				Six Months Ended
(In millions)	November 27, 2022		November 28, 2021		November 27, 2022		November 28, 2021
Switzerland	$	4.0	$	2.0	$	8.0	$	5.4
Canada	2.6		2.9		6.2		6.4
Czech Republic	1.0		0.8		1.7		1.7
Ireland	1.0		0.7		1.7		0.8
All Other Countries	0.5		0.9		1.0		1.7


	Curation Foods		Other		Total
(in thousands)
Asset write-off costs, net	$	7,552	$	418	$	7,970
Employee severance and benefit costs	803		784		1,587
Lease costs	2,263		26		2,289
Other restructuring costs	642		6,160		6,802
Total restructuring costs	$	11,260	$	7,388	$	18,648


			LIFECORE BIOMEDICAL, INC.

			By:			/s/ John D. Morberg
						John D. Morberg
						Chief Financial Officer
						(Principal Financial and Accounting Officer)


(In thousands)	Lifecore		Curation Foods		Other		Total
Three Months Ended November 27, 2022
Net sales	$	21,691	$	17,111	$	—	$	38,802
Gross profit	6,675		433		—		7,108
Net (loss) income from continuing operations	916		(3,295)		(10,070)		(12,449)
Loss from discontinued operations, net of tax	—		—		—		—
Depreciation and amortization	1,843		588		11		2,442

Interest income	16		—		—		16
Interest expense	—		—		4,219		4,219
Income tax (benefit) expense	290		(836)		550		4
Corporate overhead allocation	1,022		283		(1,305)		—

Six Months Ended November 27, 2022
Net sales	$	45,393	$	36,764	$	—	$	82,157
Gross profit	12,776		584		—		13,360


Net (loss) income from continuing operations	1,419		(6,017)		(19,202)		(23,800)
Loss from discontinued operations, net of tax	—		—		—		—
Depreciation and amortization	3,614		2,756		21		6,391
Dividend income	—		—		—		—
Interest income	31		—		—		31
Interest expense	—		1		7,896		7,897
Income tax (benefit) expense	448		(1,901)		1,461		8
Corporate overhead allocation	2,060		617		(2,677)		—




(In thousands)	Lifecore		Curation Foods		Other		Total
Three Months Ended November 28, 2021
Net sales	$	24,946	$	18,506	$	—	$	43,452
Gross profit	11,715		3,000		—		14,715
Net (loss) income from continuing operations	5,682		(747)		(706)		4,229
Loss from discontinued operations, net of tax	—		(42,670)		—		(42,670)
Depreciation and amortization	1,673		886		26		2,585

Interest income	19		—		—		19
Interest expense	—		136		2,958		3,094
Income tax (benefit) expense	1,794		(579)		(4,300)		(3,085)
Corporate overhead allocation	1,078		1,231		(2,309)		—

Six Months Ended November 28, 2021
Net sales	$	46,898	$	38,186	$	—	$	85,084
Gross profit	17,479		7,671		—		25,150
Net (loss) income from continuing operations	6,262		(1,030)		(8,636)		(3,404)
Loss from discontinued operations, net of tax	—		(44,514)		—		(44,514)
Depreciation and amortization	3,220		1,767		52		5,039
Dividend income	—		—		—		—
Interest income	39		—		7		46
Interest expense	—		273		9,499		9,772
Income tax (benefit) expense	1,977		(797)		(5,916)		(4,736)
Corporate overhead allocation	2,215		2,702		(4,917)		—


(In thousands)	Three Months Ended				Change				Six Months Ended				Change
	November 27, 2022		November 28, 2021		Amount		%		November 27, 2022		November 28, 2021		Amount		%
Lifecore	$	21,691	$	24,946	(3,255)		(13)	%	$	45,393	$	46,898	(1,505)		(3)	%
Curation Foods	17,111		18,506		(1,395)		(8)	%	36,764		38,186		(1,422)		(4)	%
Total Revenues	$	38,802	$	43,452	$	(4,650)	(11)	%	$	82,157	$	85,084	$	(2,927)	(3)	%


Exhibit Number			Exhibit Title
3.1			Certificate of Incorporation of the Registrant, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on November 7, 2008.
3.2			Amended and Restated By-Laws of the Registrant, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on October 16, 2012.
3.3			Amendment No. 1 to By-Laws of the Registrant, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 7, 2019.
3.4			Amendment No. 2 to By-Laws of the Registrant, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on May 24, 2019.
3.5			Amendment No. 3 to By-Laws of the Registrant, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on October 19, 2020.
3.6			Certificate of Amendment to Certificate Incorporation of the Company, incorporated herein by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on November 16, 2022.
3.7			Amendment No. 4 to By-Laws of the Company, incorporated herein by reference to Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on November 16, 2022.
10.1			Amendment to the Company’s 2019 Stock Incentive Plan, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 7, 2022.
10.2			Securities Purchase Agreement, dated November 25, 2022, by and among the Company and the purchasers named therein, incorporated herein by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on November 25, 2022.
31.1+			Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2+			Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**			Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**			Certification of Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS+			XBRL Instance
101.SCH+			XBRL Taxonomy Extension Schema
101.CAL+			XBRL Taxonomy Extension Calculation
101.DEF+			XBRL Taxonomy Extension Definition
101.LAB+			XBRL Taxonomy Extension Labels
101.PRE+			XBRL Taxonomy Extension Presentation
*			The schedules and other attachments to this exhibit have been omitted. The Company agrees to furnish a copy of any omitted schedules or attachments to the SEC upon request.
**			Information is furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as expressly set forth by specific reference in such filing.
+			Filed herewith.


			/s/ James G. Hall
			James G. Hall
			President and Chief Executive Officer (Principal Executive Officer)


*			The foregoing certification is being furnished solely pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (subsections (a) and (b) of Section 1350, Chapter 63 of Title 18, United States Code) and is not being filed as part of the Form 10-Q or as a separate disclosure document.