Ready? All right, great. Good morning, everybody. I'm Dave Windley with Jefferies' Healthcare Equity Research, based in the States. Really appreciate your interest and attendance in our London Healthcare Conference. I've lost track of the number of years that we've done this, but it's grown each year, and we're really gratified to have your attendance and your interest in the conference, so thank you. Here on day one, I want to kick it off with Lifecore Biomedical. They're going to present. Paul Josephs, their CEO, is here with us. Ryan Lake, the CFO, is also in the audience. I'm going to turn it over to Paul to present, and then we'll have a little bit of time for Q&A at the end. Again, thank you, and Paul, thank you.
Good morning, everybody. David, thank you. Thank you to the Jefferies team for including us in this esteemed conference. We're happy to be here and honored to be here. Lifecore Biomedical is a sterile injectable CDMO. You know, CDMOs are great businesses. Approximately 50%, depending on the report, 50% you read, approximately 50% of the drugs that are manufactured are outsourced in some manner. That makes CDMOs a great business. I look at Lifecore as more than that. It's a growth platform. We have strong commercial partnerships. I'll talk a little bit about that during our presentation. We've enabled significant capacity. We have a high-value development pipeline, and I think we're well positioned to drive significant value for our shareholders. I look forward to sharing that with you over the next few minutes. Before we get started, just a couple of administrative items.
We have changed our fiscal year and process of changing our fiscal year from a May-to-May retail calendar to concurrent with the January-to-December traditional calendar, and we have a seven-month stub period running from approximately June through December. A little information with regard to our forward-looking statements, and finally, a notation here with regard to our non-GAAP financial measures. Lifecore at a glance. As I mentioned earlier, a fully integrated, sterile injectable CDMO carrying services from development through commercialization. We are approximately 400 employees, founded in 1965. We actually celebrated our 60th anniversary in September of this year. Located in Chaska, Minnesota, and we have a strong foundation with regard to the fermentation of hyaluronic acid.
Hyaluronic acid also served as a foundation with which we entered into the sterile injectable market because we provided bulk HA to our customers, and from an ophthalmic perspective, our largest customer, this goes back 40 years, was really the advent or the genesis of us moving into sterile injectables. Our global regulatory capabilities allow us to provide products that are distributed in most of the industrial world. From a business profile perspective, we ended our last fiscal year at approximately $129 million, $19.5 million or almost $20 million in adjusted EBITDA, so 15% EBITDA margins. We are publicly traded on the NASDAQ under the symbol LFCR, and our campus is 250,000 sq ft, and I'll show you that in just a little bit. We have 20 commercial products and approximately $300 million of revenue-generating capacity, so lots of room to grow.
Our campus in Chaska has three sites, all within two sq mi, under what they characterize as one federal establishment identification number, which means we can operate the business under one quality management system, which allows for greater efficiency. Our Site 1, which is approximately 150,000 sq ft, is where all the manufacturing of our drug product is done, the primary filling, along with the fermentation of the hyaluronic acid. Site 2 is our quality control where our quality control lab is and where we do all our secondary packaging. Site Three, although only 20,000 sq ft, serves as a distribution for finished product before shipment to our end customer.
It also serves as a great opportunity for potential expansion of our business as we could add incremental capacity here as the need arises, either from a transformational opportunity with a customer or as we look to fill our facility over the mid to the long term. We're executing against what we believe to be an aggressive but sustainable strategy that will drive sustainable growth. As I talked about earlier, we have a strong commercial foundation, a foundation that is founded in hyaluronic acid that, again, allowed us to advent into sterile injectables, primarily ophthalmics for some of the leading healthcare companies that participate within that market, and orthopedic products. We have a high potential late-stage pipeline, which provides or signifies significant recurring revenue potential over the mid to the long term.
We've revamped our commercial strategy to be more aggressive to drive new and impactful growth into our business, and we've implemented a very disciplined cost structure to drive and unlock value in lieu of revenue through organizational efficiencies, strategic initiatives, and specifically procurement, specific procurement strategies. Finally, we have an experienced and deep leadership team with proven experience and successful and proven experience in the CDMO and pharmaceutical industry. Personally, this is my 31st year in the CDMO market. As David mentioned, Ryan Lake, our CFO, is also in the audience today. 25 years of life science experience, previous public company experience as a CFO, serves as a great partner to me as we drive towards our aggressive growth strategy moving forward. A couple of quick financial highlights beyond the fiscal year that I talked about. Again, fiscal 2025, almost $129 million, almost $20 million in adjusted EBITDA.
That's a seven-month stub period as we transition to a calendar fiscal year. We have guided the market and reaffirmed guidance in our November earnings call of $74 million-$76 million with $12 million-$14 million in adjusted EBITDA. A couple of the highlights or recent developments. We have ongoing preparation for an inflection point in 2027 with our largest customer, where we reached some critical milestones that helped us prepare for that inflection point and increase in demand and revenue. I'll talk about that a little bit more in future slides. We signed four new programs since the end of our fiscal year, including a late-stage GLP-1 program and an impactful commercial site transfer that, once launched, will be a top five customer for us. In September 2025, you know, we announced that we've significantly improved our liquidity position.
This has been a concern for investors in Lifecore, but we have $42.5 million at the end of September in liquidity. When Ryan joined the organization, we were fully drawn on our revolver, less than $5 million in cash. We've completely turned that around to end September with almost $19 million of cash and $23.5 million in our revolver. Over $40 million of liquidity, enough firepower, we believe, to meet our midterm transition or midterm strategy and goals and objectives. As you can see, we've had significant improvement in our SG&A expenses, and we've had significant improvements in our workforce productivity as we've reduced our headcount in manufacturing by over 20% over the last 18 months. The market itself is growing, and there are significant tailwinds. The global CDMO market's approximately $120 billion. The injectable market itself, approximately $10 billion, growing plus or minus 10%.
It's the fastest growing part of the CDMO market. The acceleration of U.S.-based manufacturing, our new administration in the U.S., it really has brought it to the fore in the news and publicly. I really believe this started with COVID, and that's where it really started, where we started to see the regionalization of manufacturing in the U.S. Whereas my history has, like I said, been in this business for 30 years, it's been really about organic development through your development pipeline to get to recurring revenue. That's the way it's been here too far. I now see an opportunity, a really transformational opportunity in our industry as site transfers to become strategic as we regionalize manufacturing in the U.S. I'm sure the same is regionalization here in Europe.
We are seeing opportunities where we did not before from Asia-Pacific, Europe transitioning to the United States, complex generic opportunities from India, and because of Middle East unrest, opportunities out of Israel as well. We see it as a great opportunity to help overdrive our near-term or our midterm pipeline and get to recurring revenue quicker. From an injectable market in totality, 50% of approvals in the U.S. are injectable products, and the phenomenon of GLP-1s are certainly impacting capacity within the CDMO and injectable market. We have made significant investments and capabilities over the last five years to enable our midterm strategy. We have invested over $90 million in our business. On a go-forward basis, the significant growth CapEx is complete and enables execution of our midterm plan.
The highlight of this capital investment is really the installation and qualification of a state-of-the-art 5-head isolator filler, which increased our capacity by more than 100% and has the ability to fill vials, syringes, and cartridges. I characterize it as almost like a Swiss Army knife. Whereas in the past, you needed three different machines, one to fill a vial, one to fill a syringe, one to fill a cartridge, this machine has the ability to do all three. It allows us to be very efficient with regard to space and investment in CapEx. On a go-forward basis, again, the growth CapEx has all been expended to enable our midterm strategy and is really around compliance and maintenance-related CapEx on a go-forward basis. Why we win and why are we winning and why do people stay? First of all, it starts with the technical expertise at Lifecore.
A large multinational pharmaceutical company who just recently signed an agreement with us characterized our technical capability as world-class. That comes from our history in formulating and manufacturing highly complex injectable products, highly viscous programs. This has allowed us to advent or expand or open the aperture into more water-based programs, biologics, peptides, other small molecules, large molecule programs. Quality. We have a high quality, great regulatory track record, but as I mentioned before, a multi-compendial system that allows us to serve the majority of the industrial world. Finally, our integrated model that runs from development through commercialization. As it comes to turn attention now to our growth strategy, it's aggressive but achievable. We have targeted a 12% revenue CAGR over the midterm and improving our adjusted EBITDA margins from 15% to greater than 25%.
Through the strong commercial foundation, which I talked about before, our high potential late-stage development pipeline, our revamped commercial strategy, our disciplined cost structure, and the support and enablement through our leadership team. As we look at this slide, it portrays where we ended FY 2025 at $129 million, utilizing 20% of our capacity, targeting a 12% revenue CAGR, taking us to approximately $178 million-$205 million over the midterm, which we characterize as the next 36 months-42 months. We build up to that $178 million-$205 million. The dark blue bar represents our existing commercial business. The light blue bar just above it represents expansion within our existing commercial business, really buoyed and in foundation about minimum volume commitments from our largest customer.
The green bar represents the conversion of our late-stage pipeline, which I look forward to sharing with you in a couple of slides, and then a nominal amount of revenue that we characterize as go-get from our business development team. As we look to increase our EBITDA margins from 15%-25%, it really is the things that I mentioned before, the reduction of our in-operating expenses, the expansion of our commercial business as we get operating leverage as we move from 20% utilization to 40%, the addition of new business and portfolio commercialization.
If you remember back just a slide ago, $200 million at the high end of that range of the 12% CAGR, 25% EBITDA margins, we are targeting being approximately a $200 million business with $50 million of EBITDA, approximately a $30 million increase in EBITDA over this 36 month-42 month period, representing significant unlock in shareholder value going forward. Executing that growth strategy has three prongs. As I mentioned, maximizing our existing customer business, advancing programs towards commercialization, and then driving new and impactful business into our site. As we look to double the volume in our commercial demand over this midterm, the majority, as you can see through that light blue bar, will come through minimum volume commitments that I articulated earlier. That comes from our largest customer, contractually committed, and we anticipate it is contractually committed starting in 2027.
Our pipeline, as we look to advance programs towards commercialization, includes 32 different programs, 12 of those late-stage, which we characterize or we define as phase three or equivalent. The total pipeline represents approximately $150 million-$200 million in revenue potential. This is our late-stage pipeline, which gives me great optimism about our future. We have one potential launch in 2026. As you can see in 2027, based on the definitions from our revenue potential at peak sales, three impactful launches in 2027, four launches in 2028, including the last one in 2028 is the commercial site transfer I mentioned before, four in 2029, which the one at the very bottom is the GLP-1 that I articulated earlier.
We believe that these 12 programs provide meaningful recurring revenue potential over the midterm, and we will look to continue to add to this number, augment this with other commercial site transfers, taking advantage of the regionalization of manufacturing in the U.S. Finally, the attraction of new business, high-value business through our revamped commercial strategy. We strategically expanded our markets beyond just the highly viscous ophthalmic and orthopedic programs. We are leveraging our state-of-the-art capabilities and our technical expertise to expand into other modalities, and we've completely revamped our commercial strategy, go-to-market strategy. Whereas heretofore, Lifecore was an organization which, in my terms, took a farming approach where we were catching opportunities, cultivating business with our existing customers and not really seeking out new customers. Obviously, our existing customers are highly important. We want to have the best relationships with them.
We want to continue to grow with them. In order to maximize the opportunity in front of us, we turned our attention to a more hunting-type approach to drive new and impactful opportunities into our site. The results are clear. We've increased the quality and quantity of our business development pipeline. We've added nine new business wins over the past two months, and we anticipate that momentum to continue. As I mentioned, we have a recent addition of a late-stage GLP-1 and a commercial site transfer, and we've expanded beyond our traditional strength and domination in the ophthalmic market and orthopedic market as well. The key takeaways, we have an aggressive and achievable strategy, high growth. We're able to participate in a high-growth market that is expected to increase by 100% by 2030.
The capital investments have been made in our organization that enable the growth and path to scale. Finally, we have an experienced leadership team that has the requisite capabilities to achieve our aggressive strategy both on the top and bottom line. Lifecore Biomedical, durable revenue growth, expanding margins, and I think an undervalued opportunity. Thank you so much.
How does your capacity coming online and some of your competitors' capacity coming online? How does that play into both the capacity you're building, contracts you're taking, and the forecast that you're putting forward?
Yeah, I think that the capacity investments have been made in advance. What I characterize, if you've seen the movie Field of Dreams, to a certain extent, the previous leadership team had the foresight to invest in the capacity that we're now aggressively selling into. I think ultimately the capacity will catch up as it comes online with other contractors. That's why I talk about our technical capability, our quality system, and our integrated model because I think those are our differentiator. At the end of the day, I showed you the 5-head isolator filler. With the right capital support, etc., everybody can have a 5-head isolator filler, but they can't necessarily have the technical capability, the quality management system, and the integrated model that Lifecore Biomedical has.
I was going to ask a version of that. You're talking about $200 million.
$200 million in revenue in the medium term. How much of that capacity is already in place? Is the answer all of it? Or thinking about what CapEx would you need to spend? Maybe the building is there, but the lines aren't, or things like that to support the $200 million. If you like, the next level of revenue, what's your path from a CapEx investment standpoint?
Great question. David, we have invested in that capacity. We have $300 million of revenue-generating capacity now. There are nominal things that we may need to invest in to get to that $300 million, but for the most part, it's all been done and invested in. Now we're in a maintenance and compliance-related CapEx, I'd say cadence, anywhere under $10 million annually. Not significant CapEx required to support our midterm strategy at all.
Thank you.
Great question.
In the bridge that you put forward, which is.
What's the split between GLP-1 and others in this one? Yes.
Oh, which one? This one?
This one, yeah.
Very small. We're not counting on the GLP-1 to have significant impact. I think the best way to answer this one is we've been very thoughtful in our approach about how we've projected the impact of this late-stage pipeline over the midterm. We've taken approximately a 50% conversion rate on the success of these 12 in order to hit our midterm projection. It's not a significant reliance on the GLP-1 is how we think about it.
I'll ask a follow-up, Paul. In the reshoring effort, there have been a number of high-profile announcements about CapEx commitments by, say, Top 10, Top 15 pharma. Some of those, I think there's logical skepticism. Some of those may have been planned investments already that got repackaged under different press releases. The spirit of the question is, as that reshoring activity happens, how much of that is outsourced in light of all these big investments for companies to spend on their own capacity?
I think the majority that has been announced is spent on their own capacity. What I would articulate to you is that whether it's large pharma or specialty pharma, our business development pipeline has only increased over the past year. While there may be these investments being made, and some of them, I agree with you, were already baked before our new administration, we still see great opportunity and growth within a number of the companies that have announced significant investments recently.
That's interesting. Another topic that comes up in this context is the capital, the equipment has its own lead time and is a hurdle for some. The bigger hurdle as we try to reshore this activity is talented labor, experienced labor. Maybe talk about your single site in Chaska, Minnesota. How's the labor force for your particular skills areas in your catchment area, your ability to hire?
Yeah, so it's highly competitive, and technical expertise in sterile injectables is critical. One of the great things about Minnesota that's well-known, it's a great scientific community. So there's a wealth of talent there. It's an area that we spend a lot of time from a human resources perspective, from a leadership perspective about how we develop and retain that top technical talent. And we've been very successful in that area.
You can continue to grow in the single location.
Yes.
Yeah.
Yes.
Thank you.
Anybody else in the room? Thank you very much for being here. Let's wrap it there.
Thank you so much.