LIFECORE BIOMEDICAL, INC. \DE\ (LFCR) Business

Item 1.    Business

The Company

Lifecore Biomedical, Inc. and its subsidiaries (“Lifecore”, the “Company”, “we” or “us”), located in Chaska, Minnesota, is a fully integrated contract development and manufacturing organization (“CDMO”) that offers highly differentiated clinical and commercial capabilities in the development, cGMP manufacturing and aseptic filling of complex formulations and highly viscous sterile injectable pharmaceutical drug or medical device products in syringes, vials and cartridges, across a wide variety of modalities. Lifecore has become a leading U.S. manufacturer of pharmaceutical-grade, non-animal-sourced hyaluronic acid (“HA”) using our proprietary, fermentation-based HA process that we developed in 1981. We manufacture HA in bulk form as well as for use in formulated and filled syringes and vials for our customers’ injectable products used in treating a broad spectrum of medical conditions and procedures, including ophthalmic and orthopedic applications. We have leveraged this expertise in HA fermentation, manufacturing and aseptic formulation and filling to also develop highly viscous non-HA-based sterile injectable products with our customers for multiple applications.

Lifecore’s product development service capabilities include analytical method development and validation, formulation development, sterile filtration, process scale-up, pilot studies, stability studies, process validation and production of materials for clinical studies. We also operate semi-automated Restricted Access Barrier Systems (“RABS”) and fully automated aseptic filling lines with isolators. These systems support efficient and safe aseptic processing of both synthetic and biologic drug products. Manufacturing takes place across our three cGMP facilities, where we produce FDA-approved (as defined below) commercial drug and device products. We have earned multiple certifications from regulatory agencies in Europe, Japan, Brazil and the International Organization for Standardization (“ISO”).

Lifecore’s predecessor business commenced in the mid-1960’s with a primary focus on microbial diagnostic devices, but Lifecore developed its HA capabilities in the early 1980’s. From 2010, when it was acquired by Landec Corporation, until 2023, our CDMO business was operated through the Lifecore subsidiary of lower-margin food businesses. In 2022, we changed our corporate name from Landec Corporation to Lifecore Biomedical, Inc. to reflect the growing focus on the CDMO business. In May 2023, Lifecore completed the divestiture of these food businesses, and beginning with fiscal year 2024, we operate as a stand-alone integrated CDMO.

During fiscal year 2025, Lifecore continued to execute on the previously announced strategic initiatives to support higher performance as a CDMO. We have made significant improvements to our revenue generating capacity, financial position, management team, governance, financial reporting and stock exchange compliance, and business development efforts, including:

•In September 2024, we doubled our revenue-generating capacity (to support up to approximately $300 million in annual revenue-generating capacity) through the installation of a new fully automated high-speed, multi-purpose 5-head aseptic isolator filler;

•We strengthened our financial position through, among other actions, (i) raising $24.3 million in a private placement of Lifecore common stock in October 2024, (ii) a three-year term extension of our existing asset-based lending revolving credit facility with BMO Harris Bank N.A. (“BMO”) in November 2024, (iii) the sale of certain excess capital equipment for $17 million in January 2025, and (iv) the implementation of operational cost reductions, including overhead costs and professional fees associated with legal, accounting and consulting spend;

•We made key executive officer appointments, including a new CEO in May 2024 and a new CFO in September 2024, as well as other senior leadership appointments thereafter, to join the existing, talented Lifecore team;

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•In June 2024, we reached a cooperation agreement with 22NW, LP pursuant to which we agreed to the appointment of certain Board members who we believe will reinforce alignment between the full Board and our stockholders;

•In August 2024, we completed required filings of our periodic reports with the SEC, held our 2023 annual meeting of stockholders and regained compliance with the listing requirements of the Nasdaq Stock Exchange (“Nasdaq”), resulting in Nasdaq ceasing potential action to delist the Company’s common stock; and

•We enhanced our business development strategy, increased our investment in sales and marketing to support brand visibility, and expanded our business development team with new sales talent who will focus on key drug development geographies in the United States and internationally.

In addition, we also implemented various process improvements to ensure improved productivity and discipline in key areas of our business. Based on all of these improvements, together with our competitive advantages and our strategic plan described below, we believe that we are well-positioned for future growth.

The Company was incorporated under the laws of the State of Delaware under its prior corporate name in 2007. The Company’s principal executive offices are located at 3515 Lyman Boulevard, Chaska, Minnesota 55318, and the telephone number is (952) 368-4300.

Competitive advantages

Lifecore believes that we have developed and are maintaining certain advantages that we expect to enable us to succeed in a competitive CDMO marketplace, including:

Strong relationships with market leaders

Through our history of successfully developing and manufacturing highly viscous HA and HA-based products, Lifecore has established long-term relationships with global and emerging biopharmaceutical and biotechnology companies who have marketing, sales and distribution capabilities to end-user markets across multiple therapeutic categories. Lifecore has multiple customer relationships ranging from 20 years to nearly 40 years. We intend to continue leveraging these relationships to attract new, long-term relationships and expand into additional pharmaceutical modalities and medical device applications.

Ability to expand medical applications for HA

Due to the growing knowledge of the unique characteristics of HA and Lifecore’s capabilities in cross-linking, we are continuing to identify and pursue opportunities for the use of HA in other medical applications beyond ophthalmic and orthopedics, such as wound care, aesthetic surgery, drug delivery, and next generation orthopedics and device coatings, and through sales to academic and corporate research customers. Further applications may involve expanding process development activity.

Manufacturing capabilities and expertise with respect to highly complex and viscous injectables

Lifecore has made strategic capital investments in its CDMO business focusing on extending its aseptic filling capacity and capabilities with respect to highly complex and viscous programs to meet increasing customer demand and to attract new opportunities outside of HA markets. Most recently, in September 2024, Lifecore installed a new fully automated high-speed, multi-purpose 5-head aseptic isolator filler, which has significantly expanded our available capacity and the range of project opportunities we can support.

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Vertically integrated CDMO capabilities

Lifecore’s vertically integrated development and manufacturing capabilities allow us to establish a variety of contractual relationships with customers globally. Lifecore’s role in these relationships extends from supplying HA raw materials to providing technology transfer and development services to manufacturing aseptically filled, finished sterile injectable products, and assuming full supply chain responsibilities.

Regulatory and quality expertise

Lifecore has built a strong multi-compendial quality and regulatory system and team that is demonstrated in its results, processes and customer relationships. With an over 40-year track record with global regulatory bodies (FDA (as defined below), EMA, ANVISA, etc.), Lifecore is a strong partner for companies looking for proven experience in delivering QbD, cGMP compliance, and manufacturing excellence. In March 2025, the FDA completed a general drug product good manufacturing practices inspection of Lifecore, and in May 2025 it closed its inspection without further required action.

Our strategy

As a trusted partner to our customers and the patients they serve, we are dedicated to supporting them in improving healthcare outcomes through the highest standards of quality and service. We provide innovative, value-added solutions for sterile development and manufacturing, driven by our talented team. Our mission drives our commitment to excellence, quality, performance and culture. To accomplish our mission, we have implemented the following growth strategies and sustaining objectives.

Growth strategies

1) Maximizing Existing Customer Business: Maximize and expand our scope of work for each customer by driving more robust relationships while ensuring our customers understand our capabilities and prioritize us for additional opportunities.

2) Advancing Programs Towards Commercialization: Continue to seek out opportunities to advance customers’ early-to-mid stage and late-stage product development activities by supporting their clinical programs and commercial process scale-up activities.

3) Driving New Business: Implement a new sales strategy to strategically expand our target market to increase our focus on large multinational pharmaceutical companies, capitalizing on investments we have made in technology and creating a more agile organization to support our expanding pipeline.

Sustaining objectives

1) Reduced Operational Expenses: Focus on value creation initiatives by eliminating low-return activities, optimizing key processes, and having a culture of continuous improvement in order to drive sustainable savings across the Company.

2) Performance-Driven Culture: Commitment to a high-performance culture driven by exceptional talent, one where we are data-driven, have top talent in all strategic roles, and where incentives are aligned with our stockholders.

3) Commitment to Quality: Maintain the highest level of quality in every aspect of our work and in our relationships with customers and regulatory agencies alike.

Reportable segments

The Company’s chief operating decision maker, as defined by U.S. generally accepted accounting principles (“U.S. GAAP”), manages CDMO and HA manufacturing operations on the basis of a single integrated segment.

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Sales and marketing

Historically, Lifecore has leveraged its deep technical expertise, long-standing customer relationships, strong brand recognition and word-of-mouth referrals to support its leadership in HA, development and manufacturing experience and expertise. We are focused on better aligning our internal resources to lead and manage existing and new clinical and commercial customer relationships in order to free up our business development team. We believe our business development team is well-positioned to strategically expand our target market by increasing focus on: large multinational pharmaceutical companies; later-stage clinical development programs; technology transfers of existing commercial programs; and a broader range of modalities. These efforts are aimed at driving new development programs into our organization. To support this strategy, we have increased our investment in sales and marketing to enhance brand visibility. Additionally, we have expanded our business development team by adding experienced sales talent focused on key drug development geographies in the United States and internationally.

Manufacturing and processing

Lifecore has three state-of-the-art facilities with a combined 250,000 square feet in Chaska, Minnesota that are all located within two miles of one another and regulated under one FDA establishment identifier number. These facilities support the HA manufacturing process and sterile manufacturing services, including formulation, aseptic filling of syringes, vials and cartridges, analytical testing, secondary packaging, warehousing of raw materials and finished goods, and distribution. Lifecore maintains exceptional versatility in the manufacturing of various finished product formats. We supply HA in a powder form at a variety of molecular weights. We also supply several different forms of HA and non-HA finished drug or device products in a variety of solutions and gels, and in a variety of bulk and single-use finished packages.

The commercial production of HA requires fermentation, separation, purification and aseptic processing capabilities. HA can primarily be produced in two ways, either through bacterial fermentation or through extraction from rooster combs. Lifecore produces HA only from bacterial fermentation, using an efficient microbial fermentation process and an effective purification operation.

In September 2024, Lifecore installed a new fully automated high-speed, multi-purpose 5-head aseptic isolator filler, which has significantly expanded our available capacity and the range of project opportunities we can support.

The Company believes that its current manufacturing capacity plan will be sufficient to allow it to meet the needs of its current customers for the foreseeable future.

Competition

The contract development and manufacturing industry for pharmaceuticals is intensely competitive and highly regulated. Lifecore’s competition in the CDMO market includes a number of full-service contract manufacturers and larger pharmaceutical, biotechnology and specialty companies that have the ability to insource manufacturing. Also, some pharmaceutical companies have been seeking to divest all or portions of their manufacturing capacity, and any such divested assets may be acquired by our competitors. Some of our significantly larger and global competitors have substantially greater financial, marketing, technical and other resources than we do.

Seasonality

Lifecore is not significantly affected by seasonality. However, the timing of customer orders, the scale, scope, mix and the duration of our fulfillment of such customer orders can result in variability in our revenues.

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Government regulation

The Food and Drug Administration (“FDA”) regulates and/or approves the clinical trials, commercial production, manufacturing, labeling, distribution, import, export, sale and promotion of medical devices and drug products in or from the United States. Most of our customers’ products are regulated by the FDA and similar agencies in other countries. These products are often classified as medical devices or drugs and usually require FDA approval or clearance before they can be sold in the United States. Beyond approval, there are strict rules for how these products are designed, made, packaged, labeled, and distributed. Our customers must keep detailed records, follow quality control standards, and are considered the product’s “Sponsor”. During commercialization of the product, the Sponsor must submit annual reports and get approval for major changes to the product or its labeling. The FDA also requires reporting of any adverse events and imposes other post-market responsibilities. Lifecore provides support to the Sponsor as requested.

In addition, Lifecore is subject to extensive and continuing regulation by the FDA, including compliance with current Good Manufacturing Practices, or cGMP, which impose procedural and documentation requirements. The FDA or other regulatory agencies can delay approval of a drug if our manufacturing facilities are not able to demonstrate compliance with cGMPs, pass other aspects of pre-approval inspections (i.e., compliance with filed submissions) or properly scale-up to produce commercial supplies. Drug manufacturers and their subcontractors, and those supplying products, ingredients and components of them, are required to register their establishments with the FDA and state agencies and are subject to periodic announced and unannounced inspections by the FDA and state agencies for compliance with cGMP and other regulations. In addition, changes to the manufacturing process are strictly regulated, and, depending on the significance of the change, may require prior FDA approval before being implemented. FDA regulations also require investigation and correction of any deviations from cGMP and impose reporting and documentation requirements. Accordingly, manufacturers like Lifecore must continue to expend time, money and effort in the area of production and quality control to maintain compliance with cGMPs and other aspects of regulatory compliance. Failure to comply with applicable requirements may result in restrictions on a product, manufacturer or holder of an approved NDA, including withdrawal of product approval, recall or seizure of the product or other voluntary, FDA‑initiated or judicial action that could delay or prohibit further operations.

Human capital

Our employees

In the first quarter of fiscal year 2025, we completed an initiative to strategically optimize our cost structure, which included optimizing our workforce. We also recast our executive leadership team, which we believe has the requisite background and experience to support Lifecore’s transformation into a standalone CDMO with enhanced technical and regulatory strengths. As of May 25, 2025, the Company had 406 full-time employees, of whom 194 were dedicated to manufacturing, 97 to quality and regulatory affairs, 83 to general operations, and 32 to sales, marketing and administrative activities. All of our employees are located in the United States. None of our employees are represented by labor unions or collective bargaining agreements.

Our human capital focus

We believe that the strength of our team and our workplace culture is essential to our ability to achieve our strategic and operational goals. Lifecore maintains an active strategy of recruitment, development and retention aligned to our growth strategies described under “Strategy” above. We closely monitor employee turnover rates, as our success depends upon retaining and investing in our team, particularly our highly trained manufacturing and technical staff. Lifecore aims to decrease employee-initiated voluntary turnover and increase employee retention through a combination of an engaging culture and opportunities for individual developmental and personal career growth.

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Our culture and employee development

Lifecore invests in creating a differentiated culture for our team that enables continuous innovation at scale. Our team is passionate about our mission to enable the success of our customers, and together we are building a performance-focused, engaged and inclusive culture.

Our hiring process has been designed to provide an equitable candidate experience, facilitate the inclusion of new perspectives and foster innovation and creativity.

We provide training to our employees in the areas of safety, compliance, leadership and human resources along with individualized, job specific training. Individual training plans for continued growth are developed between employees and supervisors or managers. Frontline leaders are provided improvement tools for training, as well as employee interface training.

We seek to empower our employees to own their career path and seek out training programs to take them to the next level. We maintain strong programs focused on growth opportunities, performance and learning, and career development.

Available information

Lifecore’s website is www.lifecore.com. Lifecore makes available free of charge copies of its Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and all amendments to these reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, or the Exchange Act, as soon as reasonably practicable after filing such material electronically with, or otherwise furnishing it to, the SEC. In addition, these materials may be obtained at the website maintained by the SEC at www.sec.gov. The reference to the Company’s website address does not constitute incorporation by reference of the information contained on the website, and the information contained on the website is not part of this document.