Lifecore Biomedical sells 10-head isolator filler for $17M to strengthen financial position
Lifecore Biomedical has sold a high-speed, multi-purpose 10-head isolator filler to an undisclosed “non-competitive buyer” for $17 million, as the Minnesota-based CDMO looks to strengthen its financial position and eliminate excess capital equipment.
Under the sales agreement for the filler, Lifecore will receive $7 million from the buyer at closing with the remaining payments expected in three tranches over the next 18 months.
In September 2024, Lifecore completed installation and qualification of a high-speed, GMP-ready 5-head isolator filler, which is designed for fill/finish activities for vials, cartridges, and pre-filled syringes. The company said it is engaging in discussions with customers to take advantage of the speed and aseptic isolation benefits of the filler.
Stephens analyst Jacob Johnson in a note following Lifecore’s Investor Day in November 2024 said the recent addition of the 5-head filler more than doubled the CDMO’s sterile injectable production capacity and that “given the company is only utilizing ~20% of its fill finish capacity, there is an opportunity for strong incremental margins” as Lifecore ramps production and leverages its fixed costs.
“With the recent installation of our high-speed 5-head filler, we have built $300 million of revenue-generating capacity to support our mid-term and long-term revenue growth objectives,” Lifecore CFO Ryan Lake said in a statement. “We felt that the sale of the 10-head filler, which we believe represented excess capital equipment, represented a compelling opportunity to monetize unused equipment and enhance our financial position.”
Last week, Lifecore reported financial results for the second quarter of fiscal 2025 with revenues of $32.6 million, an 8% increase compared to the prior year period, driven by higher sales from its largest CDMO customer.
Lifecore’s balance sheet at the end of the quarter included about $180.1 million in debt — including $6.8 million in equipment financing — as well as $44.3 million in convertible preferred stock and approximately $9.5 million in cash, according to Barrington Research analyst Michael Petusky.
In a Jan. 3 note to investors, Petusky said that “free cash flow is expected to be negative for the year but breakeven in 2H/25” and — while he likes the early progress that Lake and CEO Paul Josephs are making — “significant balance sheet leverage remains” as well as the company’s “own forecast of flat revenue and adjusted EBITDA” in fiscal year 2025.