Cover Page
Cover Page - shares | 9 Months Ended | |
Feb. 26, 2023 | May 26, 2023 | |
Cover [Abstract] | ||
Document Type | 10-Q | |
Document Quarterly Report | true | |
Document Period End Date | Feb. 26, 2023 | |
Document Transition Report | false | |
Entity File Number | 000-27446 | |
Entity Registrant Name | LIFECORE BIOMEDICAL, INC. | |
Entity Incorporation, State or Country Code | DE | |
Entity Tax Identification Number | 94-3025618 | |
Entity Address, Address Line One | 3515 Lyman Boulevard | |
Entity Address, City or Town | Chaska, | |
Entity Address, State or Province | MN | |
Entity Address, Postal Zip Code | 55318 | |
City Area Code | 952 | |
Local Phone Number | 368-4300 | |
Title of 12(b) Security | Common stock, par value $0.001 per share | |
Trading Symbol | LFCR | |
Security Exchange Name | NASDAQ | |
Entity Current Reporting Status | Yes | |
Entity Interactive Data Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Emerging Growth Company | false | |
Entity Small Business | false | |
Entity Shell Company | false | |
Entity Common Stock, Shares Outstanding | 30,322,169 | |
Entity Central Index Key | 0001005286 | |
Current Fiscal Year End Date | --05-28 | |
Document Fiscal Year Focus | 2023 | |
Document Fiscal Period Focus | Q3 | |
Amendment Flag | false |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Feb. 26, 2023 | May 29, 2022 |
Current Assets: | ||
Cash and cash equivalents | $ 2,950 | $ 991 |
Accounts receivable, less allowance for credit losses | 32,371 | 40,094 |
Inventories | 48,696 | 44,300 |
Prepaid expenses and other current assets | 4,422 | 5,183 |
Current assets, discontinued operations | 0 | 33,144 |
Total Current Assets | 88,439 | 123,712 |
Property and equipment, net | 120,799 | 115,031 |
Operating lease right-of-use assets | 5,924 | 6,519 |
Goodwill | 13,881 | 13,881 |
Trademarks/tradenames, net | 4,400 | 4,700 |
Other non-current assets | 2,710 | 2,900 |
Non-current assets, discontinued operations | 0 | 11,063 |
Total Assets | 236,153 | 277,806 |
Current Liabilities: | ||
Accounts payable | 14,762 | 12,988 |
Accrued compensation | 6,733 | 8,941 |
Other accrued liabilities | 12,012 | 6,847 |
Current portion of lease liabilities | 1,455 | 4,592 |
Deferred revenue | 2,711 | 919 |
Line of credit | 0 | 40,000 |
Current portion of long-term debt, net | 0 | 98,178 |
Current liabilities, discontinued operations | 0 | 4,345 |
Total Current Liabilities | 37,673 | 176,810 |
Line of credit | 16,000 | 0 |
Long-term debt, net | 98,964 | 0 |
Long-term lease liabilities | 10,516 | 8,356 |
Deferred taxes, net | 80 | 126 |
Other non-current liabilities | 203 | 190 |
Non-current liabilities, discontinued operations | 0 | 1,627 |
Total Liabilities | 163,436 | 187,109 |
Convertible Preferred Stock | ||
Convertible Preferred Stock, 0.001 par value; 2,000 shares authorized; 39 shares issued and outstanding at February 26, 2023 (none at May 29, 2022), respectively | 38,510 | 0 |
Stockholders’ Equity: | ||
Common Stock, $0.001 par value; 50,000 shares authorized; 30,319 and 29,513 shares issued and outstanding at February 26, 2023 and May 29, 2022, respectively | 30 | 30 |
Additional paid-in capital | 174,268 | 167,352 |
Accumulated deficit | (140,091) | (76,099) |
Accumulated other comprehensive loss | 0 | (586) |
Total Stockholders’ Equity | 34,207 | 90,697 |
Total Liabilities, Convertible Preferred Stock and Stockholders’ Equity | $ 236,153 | $ 277,806 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares | Feb. 26, 2023 | May 29, 2022 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized (in shares) | 2,000,000 | 2,000,000 |
Preferred stock, shares issued (in shares) | 39,000 | 0 |
Preferred stock, shares outstanding (in shares) | 39,000 | 0 |
Common stock, par value (in dollars per share) | $ 0.001 | $ 0.001 |
Common stock, shares authorized (in shares) | 50,000,000 | 50,000,000 |
Common stock, shares issued (in shares) | 30,319,000 | 29,513,000 |
Common stock, shares outstanding (in shares) | 30,319,000 | 29,513,000 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 26, 2023 | Feb. 27, 2022 | Feb. 26, 2023 | Feb. 27, 2022 | |
Income Statement [Abstract] | ||||
Product sales | $ 27,600 | $ 37,399 | $ 77,748 | $ 90,140 |
Cost of product sales | 21,622 | 24,533 | 58,178 | 58,507 |
Gross profit | 5,978 | 12,866 | 19,570 | 31,633 |
Operating costs and expenses: | ||||
Research and development | 1,964 | 2,000 | 6,128 | 5,722 |
Selling, general and administrative | 10,972 | 14,163 | 31,201 | 27,659 |
Impairment of indefinite-lived intangible assets | 0 | 0 | 300 | 0 |
Gain on sale of BreatheWay | 0 | 0 | (2,108) | 0 |
Restructuring costs | 2,741 | 5,270 | 4,611 | 7,530 |
Total operating costs and expenses | 15,677 | 21,433 | 40,132 | 40,911 |
Operating loss | (9,699) | (8,567) | (20,562) | (9,278) |
Interest income | 22 | 20 | 53 | 66 |
Interest expense | (5,818) | (4,105) | (13,715) | (13,877) |
Transition services income | 70 | 5,473 | 70 | 5,473 |
Other income (expense), net | 34 | 454 | (481) | 642 |
Net loss before tax | (15,391) | (6,725) | (34,635) | (16,974) |
Income tax (expense) benefit | (70) | 87 | (78) | 5,591 |
Net loss from continuing operations | (15,461) | (6,638) | (34,713) | (11,383) |
Loss from discontinued operations before taxes | (24,731) | (6,859) | (29,279) | (49,576) |
Income tax (expense) benefit | 0 | 411 | 0 | (157) |
Loss from discontinued operations, net of tax | (24,731) | (6,448) | (29,279) | (49,733) |
Net loss | $ (40,192) | $ (13,086) | $ (63,992) | $ (61,116) |
Basic net loss per share: | ||||
(Loss) income from continuing operations - basic (in dollars per share) | $ (0.51) | $ (0.23) | $ (1.16) | $ (0.39) |
Loss from discontinued operations- basic (in dollars per share) | (0.82) | (0.22) | (0.98) | (1.68) |
Total basic net loss per share (in dollars per share) | (1.33) | (0.45) | (2.14) | (2.07) |
Diluted net loss per share: | ||||
(Loss) income from continuing operations - diluted (in dollars per share) | (0.51) | (0.23) | (1.16) | (0.39) |
Loss from discontinued operations- diluted (in dollars per share) | (0.82) | (0.22) | (0.98) | (1.68) |
Total diluted net loss per share (in dollars per share) | $ (1.33) | $ (0.45) | $ (2.14) | $ (2.07) |
Shares used in per share computation: | ||||
Basic (in shares) | 30,304 | 29,482 | 29,838 | 29,459 |
Diluted (in shares) | 30,304 | 29,482 | 29,838 | 29,459 |
Other comprehensive income, net of tax: | ||||
Net unrealized gain on interest rate swaps (net of tax effect of $0, $(100), $(16) and $(190)) | $ 0 | $ 104 | $ 586 | $ 646 |
Other comprehensive income, net | 0 | 104 | 586 | 646 |
Total comprehensive loss | $ (40,192) | $ (12,982) | $ (63,406) | $ (60,470) |
Revenue from Contract with Customer, Product and Service [Extensible Enumeration] | Product [Member] | Product [Member] | Product [Member] | Product [Member] |
Cost, Product and Service [Extensible Enumeration] | Product [Member] | Product [Member] | Product [Member] | Product [Member] |
CONSOLIDATED STATEMENTS OF CO_2
CONSOLIDATED STATEMENTS OF COMPREHENSIVE (LOSS) INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 26, 2023 | Feb. 27, 2022 | Feb. 26, 2023 | Feb. 27, 2022 | |
Income Statement [Abstract] | ||||
Change in net unrealized gains (losses) on interest rate swap, tax | $ 0 | $ (100) | $ (16) | $ (190) |
CONSOLIDATED STATEMENT OF CHANG
CONSOLIDATED STATEMENT OF CHANGES IN CONVERTIBLE PREFERRED STOCK AND STOCKHOLDERS’ EQUITY - USD ($) shares in Thousands, $ in Thousands | Total | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Accumulated Other Comprehensive Loss |
Beginning balance (in shares) at May. 30, 2021 | 29,333 | ||||
Beginning balance at May. 30, 2021 | $ 202,784 | $ 29 | $ 165,533 | $ 38,580 | $ (1,358) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock under stock plans, net of shares withheld (in shares) | 129 | ||||
Taxes paid by Company for employee stock plans | (428) | (428) | |||
Stock-based compensation | 620 | 620 | |||
Net loss | (9,509) | (9,509) | |||
Other comprehensive income, net of tax | 366 | 366 | |||
Ending balance (in shares) at Aug. 29, 2021 | 29,462 | ||||
Ending balance at Aug. 29, 2021 | 193,833 | $ 29 | 165,725 | 29,071 | (992) |
Beginning balance (in shares) at May. 30, 2021 | 29,333 | ||||
Beginning balance at May. 30, 2021 | 202,784 | $ 29 | 165,533 | 38,580 | (1,358) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Convertible Preferred Stock PIK dividend | 0 | ||||
Net loss | (61,116) | ||||
Other comprehensive income, net of tax | 646 | ||||
Ending balance (in shares) at Feb. 27, 2022 | 29,482 | ||||
Ending balance at Feb. 27, 2022 | 143,724 | $ 29 | 166,943 | (22,536) | (712) |
Beginning balance (in shares) at Aug. 29, 2021 | 29,462 | ||||
Beginning balance at Aug. 29, 2021 | 193,833 | $ 29 | 165,725 | 29,071 | (992) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock under stock plans, net of shares withheld (in shares) | 19 | ||||
Taxes paid by Company for employee stock plans | (84) | (84) | |||
Stock-based compensation | 686 | 686 | |||
Net loss | (38,521) | (38,521) | |||
Other comprehensive income, net of tax | 176 | 176 | |||
Ending balance (in shares) at Nov. 28, 2021 | 29,481 | ||||
Ending balance at Nov. 28, 2021 | 156,090 | $ 29 | 166,327 | (9,450) | (816) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock under stock plans, net of shares withheld (in shares) | 1 | ||||
Taxes paid by Company for employee stock plans | (6) | (6) | |||
Stock-based compensation | 622 | 622 | |||
Net loss | (13,086) | (13,086) | |||
Other comprehensive income, net of tax | 104 | 104 | |||
Ending balance (in shares) at Feb. 27, 2022 | 29,482 | ||||
Ending balance at Feb. 27, 2022 | $ 143,724 | $ 29 | 166,943 | (22,536) | (712) |
Beginning balance (in shares) at May. 29, 2022 | 29,513 | 29,513 | |||
Beginning balance at May. 29, 2022 | $ 90,697 | $ 30 | 167,352 | (76,099) | (586) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock under stock plans, net of shares withheld (in shares) | 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 | |||
Ending balance (in shares) at Aug. 28, 2022 | 29,593 | ||||
Ending balance at Aug. 28, 2022 | $ 80,364 | $ 30 | 168,070 | (87,450) | (286) |
Convertible Preferred Stock, ending balance (in shares) at Feb. 26, 2023 | 39 | ||||
Convertible Preferred Stock, ending balance at Feb. 26, 2023 | $ 38,510 | ||||
Beginning balance (in shares) at May. 29, 2022 | 29,513 | 29,513 | |||
Beginning balance at May. 29, 2022 | $ 90,697 | $ 30 | 167,352 | (76,099) | (586) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Convertible Preferred Stock PIK dividend | (428) | ||||
Net loss | (63,992) | ||||
Other comprehensive income, net of tax | $ 586 | ||||
Ending balance (in shares) at Feb. 26, 2023 | 30,319 | 30,319 | |||
Ending balance at Feb. 26, 2023 | $ 34,207 | $ 30 | 174,268 | (140,091) | 0 |
Convertible Preferred Stock, ending balance (in shares) at Nov. 27, 2022 | 0 | ||||
Convertible Preferred Stock, ending balance at Nov. 27, 2022 | $ 0 | ||||
Beginning balance (in shares) at Aug. 28, 2022 | 29,593 | ||||
Beginning balance at Aug. 28, 2022 | 80,364 | $ 30 | 168,070 | (87,450) | (286) |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock under stock plans, net of shares withheld (in shares) | 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 (in shares) | 628 | ||||
Issuance of shares to Wynnefield Capital, Inc. | 5,000 | 5,000 | |||
Ending balance (in shares) at Nov. 27, 2022 | 30,297 | ||||
Ending balance at Nov. 27, 2022 | $ 74,167 | $ 30 | 174,036 | (99,899) | 0 |
Increase (Decrease) in Temporary Equity [Roll Forward] | |||||
Proceeds of Convertible Preferred Stock, net of issuance costs (in shares) | 39 | ||||
Proceeds of Convertible Preferred Stock, net of issuance costs | $ 38,082 | ||||
Convertible Preferred Stock PIK dividend | $ 428 | ||||
Convertible Preferred Stock, ending balance (in shares) at Feb. 26, 2023 | 39 | ||||
Convertible Preferred Stock, ending balance at Feb. 26, 2023 | $ 38,510 | ||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||
Issuance of stock under stock plans, net of shares withheld (in shares) | 22 | ||||
Taxes paid by Company for employee stock plans | (65) | (65) | |||
Convertible Preferred Stock PIK dividend | (428) | (428) | |||
Stock-based compensation | 903 | 903 | |||
Net loss | (40,192) | (40,192) | |||
Other comprehensive income, net of tax | 0 | ||||
Issuance of shares to Wynnefield Capital, Inc. | $ (178) | (178) | |||
Ending balance (in shares) at Feb. 26, 2023 | 30,319 | 30,319 | |||
Ending balance at Feb. 26, 2023 | $ 34,207 | $ 30 | $ 174,268 | $ (140,091) | $ 0 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 9 Months Ended | |
Feb. 26, 2023 | Feb. 27, 2022 | |
Cash flows from operating activities: | ||
Net loss | $ (63,992) | $ (61,116) |
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Impairment of indefinite-lived intangible assets and goodwill | 300 | 32,057 |
Depreciation, amortization of intangibles, debt costs and right-of-use assets | 10,392 | 14,488 |
Gain on sale of BreatheWay | (2,108) | 0 |
Stock-based compensation expense | 2,796 | 1,928 |
Deferred taxes | 57 | (5,471) |
Loss on disposal of property and equipment related to restructuring, net | 0 | 5,185 |
Other, net | 101 | (540) |
Changes in current assets and current liabilities: | ||
Accounts receivable, net | 8,994 | (7,525) |
Inventories | (13,451) | (11,910) |
Prepaid expenses and other current assets | (1,169) | (1,448) |
Accounts payable | 11,405 | 13,507 |
Accrued compensation | (1,895) | (2,027) |
Other accrued liabilities | 8,570 | (70) |
Deferred revenue | 1,792 | 662 |
Net cash used in operating activities | (17,169) | (22,045) |
Cash flows from investing activities: | ||
Purchases of property and equipment | (12,319) | (18,539) |
Working capital adjustments | 0 | 2,390 |
Sale of Investment in non-public company | 0 | 45,100 |
Proceeds from sales of property and equipment | 0 | 1,096 |
Net cash provided by investing activities | 3,347 | 98,767 |
Cash flows from financing activities: | ||
Proceeds from sale of common stock, net of issuance costs | 4,822 | 0 |
Proceeds from long-term debt | 3,367 | 0 |
Payments on long-term debt | (3,199) | (86,376) |
Proceeds from lines of credit | 18,400 | 45,011 |
Payments on lines of credit | (42,400) | (34,111) |
Taxes paid for employee stock plans | (274) | (518) |
Payments for debt issuance costs | (3,669) | (169) |
Proceeds from sale of preferred stock, net of issuance costs | 38,082 | 0 |
Net cash provided by (used in) financing activities | 15,129 | (76,163) |
Net increase in cash and cash equivalents | 1,307 | 559 |
Cash and cash equivalents, beginning of period | 1,643 | 1,295 |
Cash and cash equivalents, end of period | 2,950 | 1,854 |
Supplemental disclosure of non-cash investing and financing activities: | ||
Purchases of property and equipment on trade vendor credit | 3,918 | 1,764 |
Convertible Preferred Stock PIK dividend | (428) | 0 |
Yucatan | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Loss on disposition of business | 21,039 | 0 |
Cash flows from investing activities: | ||
Proceeds from the sale of BreatheWay, net | 12,531 | 0 |
Eat Smart | ||
Adjustments to reconcile net loss to net cash used in operating activities: | ||
Loss on disposition of business | 0 | 235 |
Cash flows from investing activities: | ||
Proceeds from the sale of BreatheWay, net | 0 | 73,500 |
BreatheWay | ||
Cash flows from investing activities: | ||
Proceeds from the sale of BreatheWay, net | $ 3,135 | $ 0 |
Organization, Basis of Presenta
Organization, Basis of Presentation, and Summary of Significant Accounting Policies | 9 Months Ended |
Feb. 26, 2023 | |
Accounting Policies [Abstract] | |
Organization, Basis of Presentation, and Summary of Significant Accounting Policies | Organization, Basis of Presentation, and Summary of Significant Accounting Policies Organization Lifecore Biomedical, Inc. and its subsidiaries (“Lifecore Biomedical” or the “Company”, previously Landec Corporation) design, develop, manufacture, and sell differentiated products for food and biomaterials markets, and license technology applications to partners. Lifecore Biomedical’s biomedical company, Lifecore Biomedical Operating Company, Inc. (“Lifecore”), is a fully integrated contract development and manufacturing organization (“CDMO”) that offers highly differentiated capabilities in the development, fill and finish of sterile, injectable-grade pharmaceutical products in syringes and vials. As a leading manufacturer of premium, injectable grade Hyaluronic Acid, Lifecore brings 37 years of expertise as a partner for global and emerging biopharmaceutical and biotechnology companies across multiple therapeutic categories to bring their innovations to market. Lifecore recognizes revenue in two different product categories, CDMO and Fermentation. Lifecore Biomedical previously operated a natural food company, through its wholly owned subsidiary, Curation Foods, Inc. (“Curation Foods”), which was previously focused on the distribution of plant-based foods to retail, club and foodservice channels throughout North America, which was presented in Lifecore Biomedical’s prior financial statements as the Curation Foods segment. However, upon the sale of Yucatan Foods on February 7, 2023 (see “Yucatan Disposition and Discontinued Operations” below) and O Olive Oil & Vinegar (“O Olive”) on April 6, 2023, (refer to Note 10), the Company has ceased to operate the Curation Foods business. Accordingly, commencing in the fourth quarter of fiscal year 2023, the Curation Foods segment of Lifecore Biomedical will be presented as a discontinued operation in its entirety. On November 14, 2022, the Company filed an amendment to the Certificate of Incorporation to change the Company’s name from Landec Corporation to Lifecore Biomedical, Inc. (the “Name Change”), which was approved by the board of directors of the Company and became effective on November 14, 2022. In connection with the Name Change, the Company’s common stock began trading under its new NASDAQ ticker symbol, “LFCR”, on November 15, 2022. References to “Landec” or “Landec Corporation” refer to operations and/or transactions of the Company prior to the Name Change. Yucatan Disposition and Discontinued Operations On February 7, 2023 (the “Closing Date”), Company, Camden Fruit Corp., a direct wholly owned subsidiary of Curation Foods and an indirect wholly owned subsidiary of the Company (“Camden” and together with the Curation Foods and the Company, the “Sellers”), Yucatan Foods, LLC, a wholly owned subsidiary of the Camden (“Yucatan”), and Yucatan Acquisition Holdings LLC, a wholly owned subsidiary of Flagship Food Group LLC (“Buyer” and together with Yucatan and the Sellers, the “Parties”) completed the sale (the “Yucatan Disposition”) of the Company’s avocado products business, including its Yucatan® and Cabo Fresh® brands, as well as the associated manufacturing facility and operations in Guanajuato, Mexico (the “Business”), pursuant to the terms of a securities purchase agreement executed by the Parties on February 7, 2023 (the “Securities Purchase Agreement”). Pursuant to the Securities Purchase Agreement, Buyer acquired all of the outstanding equity securities of Yucatan for a purchase price of $17.5 million in cash, subject to certain post-closing adjustments at closing, including selling costs, net working capital and other adjustments amounting to $5.0 million. The Company recognized a loss on the Yucatan Disposition of $21.0 million in the third quarter ended February 26, 2023. The loss on the Yucatan Disposition is recorded in loss from discontinued operations in the Consolidated Statement of Comprehensive (Loss) Income. The accounting requirements for reporting the Yucatan Foods business as discontinued operations were met when the Yucatan Disposition was completed on the Closing Date. Accordingly, the consolidated financial statements and notes to the consolidated financial statements reflect the results of the Yucatan business as a discontinued operation for the periods presented. Refer to Note 9 - Discontinued Operations for additional information. Securities Purchase Agreement On November 25, 2022, the Company entered into a Securities Purchase Agreement (the “Wynnefield Purchase Agreement”) with entities affiliated with Wynnefield Capital, Inc. (the “Purchasers”). Pursuant to the Wynnefield Purchase Agreement, the Company agreed to sell an aggregate of 627,746 shares of its common stock (the “Shares”) for aggregate gross proceeds of approximately $5.0 million (the “Offering”). The purchase price for each Share was $7.97. The Offering closed on November 25, 2022. Pursuant to the Wynnefield Purchase Agreement, the Company granted the Purchasers certain piggyback registration rights and agreed, among other things, to indemnify such parties under any registration statement filed that includes the Shares from certain losses, claims, damages and liabilities. Series A Convertible Preferred Share Purchase Agreement On January 9, 2023, the Company simultaneously signed and closed a Securities Purchase Agreement (the “Preferred Share Purchase Agreement”) with a group of certain accredited investors. Refer to Note 2 – Convertible Preferred Stock for additional information. Amendment to Credit Agreements On January 9, 2023, the Company entered into certain amendments to its existing Credit Facilities (defined below). Refer to Note 6 – Debt and Note 10 – Subsequent Events for additional information. Basis of Presentation The accompanying unaudited consolidated financial statements of Lifecore Biomedical have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) have been made which are necessary to present fairly the financial position of the Company at February 26, 2023, and the results of operations and cash flows for all periods presented. Although Lifecore Biomedical believes that the disclosures in these financial statements are adequate to make the information presented not misleading, certain information normally included in financial statements and related footnotes prepared in accordance with GAAP have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). The accompanying financial data should be reviewed in conjunction with the audited financial statements and accompanying notes included in Lifecore Biomedical’s Annual Report on Form 10-K/A for the fiscal year ended May 29, 2022 (the “Annual Report”). The Company’s fiscal year is the 52- or 53-week period that ends on the last Sunday of May with quarters within each year ending on the last Sunday of August, November, and February; however, in instances where the last Sunday would result in a quarter being 12-weeks in length, the Company’s policy is to extend that quarter to the following Sunday. A 14th week is included in the fiscal year every five or six years to realign the Company’s fiscal quarters with calendar quarters. The results of operations for the three and nine months ended February 26, 2023 are not necessarily indicative of the results that may be expected for an entire fiscal year because there is some seasonality in the order patterns of Lifecore’s customers which may lead to significant fluctuations in Lifecore Biomedical’s quarterly results of operations. Basis of Consolidation The consolidated financial statements are presented on the accrual basis of accounting in accordance with GAAP and include the accounts of Lifecore Biomedical and its subsidiaries, Lifecore and Curation Foods. All material inter-company transactions and balances have been eliminated. Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make certain estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. The accounting estimates that require management’s most significant and subjective judgments include revenue recognition; loss contingencies; sales returns and credit losses; recognition and measurement of current and deferred income tax assets and liabilities; the assessment of recoverability of long-lived and indefinite lived assets (including intangible assets and goodwill), and inventory; and the valuation and recognition of stock-based compensation. These estimates involve the consideration of complex factors and require management to make judgments. The analysis of historical and future trends can require extended periods of time to resolve and are subject to change from period to period. The actual results may differ from management’s estimates. Going Concern Update As disclosed in the Company’s previous filings, the Company had previously determined that there were factors, which was principally the result of our noncompliance with financial covenants, that raised substantial doubt about its ability to continue as a going concern. Since that time, the Company has taken measures to strengthen its financial position, including the repayment and termination of the Prior Term Loan Facility, and the entry into the Refinancing Transactions (defined below), in each case, on May 22, 2023. The Refinancing Transactions provided the Company with additional liquidity, eliminated the Company’s noncompliance with its financial covenants under Credit Facilities (including granting the Company applicable waivers under the Revolving Term Loan Facility), reduced the Company’s near-term debt service costs, and eliminated certain financial covenants that existed under the Prior Term Loan Facility. In addition, the completion of the Company’s sale of the Yucatan and O Olive business, and the entry into an amended and restated supply agreement with Alcon Research, LLC (“Alcon”) to extend and expand its prior supply agreement, as further described in Note 10 – Subsequent Events, also provided the Company with additional liquidity. The cash provided under the Refinancing Transactions, completed divestitures of remaining Curation Foods businesses, and the lower debt service costs under our Refinancing Transactions provide improved forecasted cash flow from operations that allow sufficient liquidity over the next 12 months to meet our obligations as they come due. Based on the foregoing, management believes that our cash position as of the date of filing these financial statement (the “Filing Date”) and forecasted cash flow from operations is sufficient to meet capital and liquidity requirements for at least the next 12 months. As a result, there is no longer substantial doubt about the Company’s ability to continue as a going concern. Cash and Cash Equivalents The Company records all highly liquid securities with three months or less from date of purchase to maturity as cash equivalents. Cash equivalents consist mainly of money market funds. The market value of cash equivalents approximates their historical cost given their short-term nature. Reconciliation of Cash and Cash Equivalents as presented on the Statements of Cash Flows The following table provides a reconciliation of cash and cash equivalents and cash and cash equivalents, discontinued operations within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows: (In thousands) February 26, 2023 May 29, 2022 February 27, 2022 May 30, 2021 Cash and cash equivalents $ 2,950 $ 991 $ 1,854 $ 1,159 Cash and cash equivalents, discontinued operations — 652 — 136 Cash and cash equivalents $ 2,950 $ 1,643 $ 1,854 $ 1,295 Inventories Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value and consist of the following: (In thousands) February 26, 2023 May 29, 2022 Finished goods $ 14,636 $ 13,418 Raw materials 22,554 21,329 Work in progress 11,506 9,553 Total $ 48,696 $ 44,300 If the cost of the inventories exceeds their net realizable value, provisions are recorded currently to reduce them to net realizable value. The Company also records a provision for slow moving and obsolete inventories based on the estimate of demand for its products. Accounts Receivable, Sales Returns and Allowance for Credit Losses The Company carries its accounts receivable at their face amounts less an allowance for estimated sales returns and credit losses. Sales return allowances are estimated based on historical sales return amounts. The Company uses the loss rate method to estimate its expected credit losses on trade accounts receivable and contract assets. In order to estimate expected credit losses, the Company assessed recent historical experience, current economic conditions and any reasonable and supportable forecasts to identify risk characteristics that are shared within the financial asset. These risk characteristics are then used to bifurcate the loss rate method into risk pools. The risk pools were determined based on the industries in which the Company operates. Historical credit loss for each risk pool is then applied to the current period aging as presented in the identified risk pools to determine the needed reserve allowance. At times when there are no current economic conditions or forecasts that may affect future credit losses, the Company has determined that recent historical experience provides the best basis for estimating credit losses. The information obtained from assessing historical experience, current economic conditions and reasonable and supportable forecasts were used to identify risk characteristics that can affect future credit loss experience. There were no significant risk characteristics identified in the review of historical experiences or in the review of estimates of current economic conditions and forecasts. Estimating credit losses based on risk characteristics requires significant judgment by management. Significant judgments include, but are not limited to: assessing current economic conditions and the extent to which they are relevant to the existing characteristics of the Company’s financial assets, the estimated life of financial assets, and the level of reliance on historical experience in light of economic conditions. The Company will continually review and update, when necessary, its historical risk characteristics that are meaningful to estimating credit losses, any new risk characteristics that arise in the natural course of business, and the estimated life of its financial assets. The changes in the Company’s allowance for credit losses are summarized in the following table (in thousands): Balance at Provision (benefit) for expected credit losses Write offs, Balance at Nine months ended February 26, 2023 $ 5 $ — $ (1) $ 4 Nine months ended February 27, 2022 $ 5 $ — $ — $ 5 Debt Issuance Costs The Company records its line of credit debt issuance costs as an asset, and as such, $0.7 million and $1.3 million were recorded as Prepaid expenses and other current assets, and Other non-current assets in the accompanying Consolidated Balance Sheets, respectively, as of February 26, 2023, and $0.7 million and $1.9 million, respectively, as of May 29, 2022. The Company records its term debt issuance costs as a contra-liability, and as such, $8.1 million and $5.5 million were recorded as a reduction to long-term debt, net and current portion of long-term debt, net in the accompanying Consolidated Balance Sheets, respectively, as of February 26, 2023 and May 29, 2022. Financial Instruments The Company’s financial instruments are primarily composed of commercial-term trade payables, debt instruments, and derivative instruments. For short-term instruments, the historical carrying amount approximates the fair value of the instrument. The fair value of long-term debt and lines of credit approximates their carrying value. Cash Flow Hedges The Company has entered into interest rate swap agreements to manage interest rate risk. These derivative instruments may offset a portion of the changes in interest expense. The Company designates these derivative instruments as cash flow hedges. The Company accounts for its derivative instruments as either an asset or a liability and carries them at fair value in Other assets or Other non-current liabilities. The accounting for changes in the fair value of the derivative instrument depends on the intended use of the derivative instrument and the resulting designation. For derivative instruments that hedge the exposure to variability in expected future cash flows and are designated as cash flow hedges, the entire change in the fair value of the hedging instrument is recorded as a component of Accumulated other comprehensive loss (“AOCL”) in Stockholders’ Equity. Those amounts are subsequently reclassified to earnings in the same line item in the Consolidated Statements of Comprehensive (Loss) Income as impacted when the hedged item affects earnings. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. During the third quarter of fiscal year 2021, the Company discontinued its hedge accounting prospectively since it was determined that the derivatives are no longer highly effective in offsetting changes in the net investment. The derivatives continue to be carried at fair value in the accompanying Consolidated Balance Sheets with changes in their fair values from the date of discontinued hedge accounting recognized in current period earnings in Other income (expense), net in the Consolidated Statements of Comprehensive (Loss) Income. Amounts previously accumulated in AOCL during the period of effectiveness will continue to be realized over the remaining term of the underlying forecasted debt payments as a component of AOCL in Stockholders’ Equity. Accumulated Other Comprehensive Loss Comprehensive income (loss) consists of two components, net loss and other comprehensive income (loss) (“OCI”). OCI refers to revenue, expenses, and gains and losses that under GAAP are recorded as a component of stockholders’ equity but are excluded from net loss. The Company’s OCI consists of net deferred gains and losses on its interest rate swap derivative instruments. The components of AOCL, net of tax, are as follows: (In thousands) AOCL Balance as of May 29, 2022 $ (586) Amounts reclassified from OCI 586 Other comprehensive income, net $ 586 Balance as of February 26, 2023 $ — Assets Held for Sale In May 2021, the Board of Directors approved a plan to sell Curation Foods’ Rock Hill, South Carolina distribution facil ity. There was no impairment recorded in fiscal year 2021. The asset was sold on June 9, 2021 for gross proceeds of $1.1 million. A gain of $0.6 million was recorded upon the sale and was included in loss from discontinued operations within the Consolidated Statements of Comprehensive (Loss) Income. In May 2022, the Board of Directors approved a plan to sell the assets of Curation Foods’ BreatheWay packaging technology business. The $1.0 million carrying value of these assets ($0.9 million of inventory and $0.1 million net book value of property and equipment) are included in Prepaid expenses and other current assets on the Consolidated Balance Sheets as of May 29, 2022 and were classified as assets held for sale. These assets were sold during the first quarter of fiscal year 2023 for net proceeds of $3.1 million. A gain of $2.1 million was recorded upon the sale, which is included in Selling, general and administrative within the Consolidated Statements of Comprehensive (Loss) Income for the nine months ended February 26, 2023. Leases Under Topic 842, the Company determines if an arrangement is a lease at inception. Right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is a quoted rate based on the understanding of what the Company’s credit rating would be. Certain agreements may contain the option to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset. The Company, when reasonably certain to exercise the option, considers these options in determining the measurement of the lease. The Company’s lease agreements do not contain any material residual value guarantees. The Company’s lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. The Company combines fixed payments for non-lease components with lease payments and accounts for them together as a single lease component which increases the amount of lease assets and liabilities. Payments under lease arrangements are primarily fixed; however, certain lease agreements contain variable payments, which are expensed as incurred and are not included in the operating lease assets and liabilities. These amounts primarily include payments affected by changes in price indices. Long-lived and Indefinite-Lived Intangible Assets The Company’s intangible assets are comprised of customer relationships with a finite estimated useful life of 12 years, and trademarks/tradenames and goodwill with indefinite useful lives. During the nine months ended February 26, 2023, the Company recorded an impairment charge of $1.0 million related to Yucatan Foods indefinite-lived intangible asset related to trademarks/tradenames which is included in discontinued operations. In addition, during the nine months ended February 26, 2023, the Company recorded an impairment charge of $0.3 million related to O Olive’s indefinite-lived intangible asset for their trademarks/tradenames. The impairments were determined using the royalty savings method to estimate the fair value of its trademarks and was primarily a result of an indication of a decrease in the fair market value of the Yucatan Foods and O Olive businesses driven by lower market valuations and a decrease in projected cash flows. The O Olive impairment charge is included in the line item “Impairment of indefinite-lived intangible assets” on the Consolidated Statements of Comprehensive (Loss) Income, and is reported in the Curation Foods business segment (See Note 7). Fair Value Measurements The Company uses fair value measurement accounting for financial assets and liabilities and for financial instruments and certain other items measured at fair value. The Company has elected the fair value option for its investment in a non-public company. The Company has not elected the fair value option for any of its other eligible financial assets or liabilities. The accounting guidance established a three-tier hierarchy for fair value measurements, which prioritizes the inputs used in measuring fair value as follows: Level 1 – observable inputs such as quoted prices for identical instruments in active markets. Level 2 – inputs other than quoted prices in active markets that are observable either directly or indirectly through corroboration with observable market data. Level 3 – unobservable inputs in which there is little or no market data, which would require the Company to develop its own assumptions. As of February 26, 2023 and May 29, 2022, the Company held certain assets and liabilities that are required or it elected to be measured at fair value on a recurring basis, including its interest rate swap contracts. As of May 29, 2022, related to the assets of Curation Foods’ BreatheWay packaging technology business, the Company had $1.0 million in Prepaid expenses and other current assets within the Consolidated Balance Sheet meeting the criteria of held for sale. These assets are recognized at the lower of cost or fair value less cost to sell using market approach. The fair value of these assets are classified as level 3 in the fair value hierarchy due to a mix of unobservable inputs utilized such as independent research in the market as well as actual quotes from market participants. Imprecision in estimating unobservable market inputs can affect the amount of gain or loss recorded for a particular position. The use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different estimate of fair value at the reporting date. The following table summarizes the fair value of the Company’s assets and liabilities that are measured at fair value on a recurring and nonrecurring basis (in thousands): Fair Value at February 26, 2023 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 Property & equipment — — — — 3,500 — Customer relationship — — — — — 1,400 Tradenames — — — — — 4,000 Total assets — — — — 3,500 6,427 Revenue Recognition The Company follows the five step, principles-based model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects the consideration for which the Company expects to be entitled in exchange for those goods or services. Revenue, net of estimated allowances and returns, is recognized when or as the Company satisfies its performance obligations under a contract and control of the product is transferred to the customer. Lifecore Lifecore generates revenue from two integrated activities: CDMO and Fermentation. CDMO is comprised of aseptic and development services. Lifecore’s standard terms of sale are generally included in its contracts and purchase orders. Shipping and other transportation costs charged to customers are recorded in both revenue and cost of goods sold. Lifecore has elected to account for shipping and handling as fulfillment activities, and not as a separate performance obligation. Lifecore’s standard payment terms with its customers generally range from 30 days to 60 days. Aseptic Lifecore provides aseptic formulation and filling of syringes and vials with precisely formulated medical grade HA and non-HA materials for injectable products used for medical purposes. In instances where our customers contract with us to aseptically fill syringes or vials with our HA, the goods are not distinct in the context of the contract. Lifecore recognizes revenue for these products at the point in time when legal title to the product is transferred to the customer, which is at the time that shipment is made or upon delivery of the product. Development Services Lifecore provides product development services to assist its customers in obtaining regulatory approval for the commercial sale of their drug product. These services include activities such as technology development, material component changes, analytical method development, formulation development, pilot studies, stability studies, process validation and production of materials for use within clinical studies. The Company’s customers benefit from the expertise of its scientists who have extensive experience performing such tasks. Each of the promised goods and services are not distinct in the context of the contract as the goods and services are highly interdependent and interrelated. The services described above are significantly affected by each other because Lifecore would not be able to fulfill its promise by transferring each of the goods or services independently. Revenues generated from development services arrangements are recognized over time as Lifecore is creating an asset without an alternate use as it is unique to the customer. Furthermore, the Company has an enforceable right to payment for the performance completed to date for its costs incurred in satisfying the performance obligation plus a reasonable profit margin. For each of the development activities performed by Lifecore as described above, labor is the primary input (i.e., labor costs represent the majority of the costs incurred in the completion of the services). The Company determined that labor hours are the best measure of progress as it most accurately depicts the effort extended to satisfy the performance obligation over time. Fermentation Lifecore manufactures and sells pharmaceutical-grade sodium hyaluronate (“HA”) in bulk form to its customers. The HA produced is distinct as customers are able to utilize the product provided under HA supply contracts when they obtain control. Lifecore recognizes revenue for these products at the point in time when legal title to the product is transferred to the customer, which is at the time that shipment is made or upon delivery of the product to our customer. Curation Foods Curation Foods’ standard terms of sale, both prior to and following the Eat Smart Disposition and Yucatan Disposition, are generally included in its contracts and purchase orders. Revenue is recognized at the time shipment is made or upon delivery as control of the product is transferred to the customer. Shipping and other transportation costs charged to customers are recorded in both revenue and cost of goods sold. Curation Foods has elected to account for shipping and handling as fulfillment activities, and not as a separate performance obligation. Curation Foods’ standard payment terms with its customers generally range from 30 days to 90 days. Certain customers may receive cash-based incentives (including: volume rebates, discounts, and promotions), which are accounted for as variable consideration to Curation Foods’ performance obligations. Curation Foods estimates these sales incentives based on the expected amount to be provided to its customers and reduces revenues recognized towards its performance obligations. The Company has not historically had and does not anticipate significant changes in its estimates for variable consideration. The Company disaggregates its revenue by segment based on how it markets its products and services and reviews results of operations. The following tables disaggregate segment revenue by major product lines and services: (In thousands) Three Months Ended Nine Months Ended Lifecore: February 26, 2023 February 27, 2022 February 26, 2023 February 27, 2022 Contact development and manufacturing organization $ 17,809 $ 24,799 $ 52,088 $ 63,951 Fermentation 8,521 10,009 19,635 17,756 Total $ 26,330 $ 34,808 $ 71,723 $ 81,707 (In thousands) Three Months Ended Nine Months Ended Curation Foods: February 26, 2023 February 27, 2022 February 26, 2023 February 27, 2022 Olive Oil and vinegars $ 1,270 $ 2,169 $ 6,025 $ 7,016 Technology — 422 — 1,417 Total $ 1,270 $ 2,591 $ 6,025 $ 8,433 Contract Assets and Liabilities Contract assets primarily relate to the Company’s conditional right to consideration for work completed but not billed at the reporting date. The Company’s contract assets as of February 26, 2023 and May 29, 2022, were $4.7 million and $10.2 million, respectively. Contract liabilities primarily relate to payments received from customers in advance of performance under the contract. The Company’s contract liabilities as of February 26, 2023 and May 29, 2022, were $2.7 million and $0.9 million, respectively. Revenue recognized during the three and nine months ended February 26, 2023, that was included in the contract liability balance at the beginning of fiscal year 2023, was $0.1 million and $0.5 million, respectively. Shipping and Handling Costs Amounts billed to third-party customers for shipping and handling are included as a component of revenues. Shipping and handling costs incurred are included as a component of cost of products sold and represent costs incurred to ship product from the processing facility or distribution center to the end consumer markets. Legal Contingencies In the ordinary course of business, the Company is involved in various legal proceedings and claims. The Company makes a provision for a liability relating to legal matters when it is both probable that a liability has been incurred and the amount of t |
Convertible Preferred Stock
Convertible Preferred Stock | 9 Months Ended |
Feb. 26, 2023 | |
Equity [Abstract] | |
Convertible Preferred Stock | Convertible Preferred Stock On January 9, 2023, the Company issued an aggregate of 38,750 shares of the Series A Convertible Preferred Stock, par value $0.001 per share (the “Convertible Preferred Stock”), all of which are convertible into shares of common stock at the election of the holders of the Convertible Preferred Stock, subject to the exchange and beneficial ownership limitations described below. The Convertible Preferred Stock ranks senior to the Company’s common stock with respect to dividends, distributions and payments on liquidation, winding-up and dissolution. Upon issuance, the shares of the Convertible Preferred Stock are fully paid and non-assessable, which means that its holders have paid their purchase price in full and are not required to pay additional funds. Dividends The holders of Convertible Preferred Stock are entitled to dividends on the Liquidation Preference (as defined below) at the rate of 7.5% per annum, payable in-kind (“PIK”). The Company may, at its option, pay such dividends in cash from and after the earlier of June 29, 2026, or the termination or waiver of the restriction on cash dividends and/or redemptions that is set forth in the Credit Facilities (such earlier date, the “Applicable Date”). The holders are also entitled to participate in dividends declared or paid on the common stock on an as-converted basis. Liquidation and Redemption Upon a liquidation, dissolution, winding up or change of control of the Company, each share of Convertible Preferred Stock will be entitled to receive an amount per share of Convertible Preferred Stock equal to the greater of (i) the purchase price paid by the purchaser at issuance, plus all accrued and unpaid dividends (the “Liquidation Preference”) and (ii) the amount that the holder of Convertible Preferred Stock (each, a “Holder” and collectively, the “Holders”) would have been entitled to receive at such time if the Convertible Preferred Stock had been converted into common stock immediately prior to such liquidation event. Upon certain bankruptcy events, the Company is required to pay to each Holder an amount in cash equal to the Liquidation Preference being redeemed. From and after the Applicable Date, each Holder shall have the right to require the Company to redeem all or any part of such Holder’s Convertible Preferred Stock for an amount equal to the Liquidation Preference. At the time of a redemption, if the Company does not have sufficient funds to redeem any preferred shares submitted for redemption, each holder is entitled to receive interest on the unpaid portion of the redemption at 1% per month until fully paid (the “1% contingent interest”). As of February 26, 2023, the aggregate liquidation preference of the Convertible Preferred Stock approximated $39.2 million. Conversion Each Holder has the right, at its option, to convert its Convertible Preferred Stock, in whole or in part, into fully paid and non-assessable shares of common stock at an initial conversion price equal to $7.00 per share. The conversion price is subject to customary anti-dilution adjustments, including in the event of any stock split, stock dividend, recapitalization or similar events, and is also subject to adjustment in the event of subsequent offerings of common stock or convertible securities by the Company for less than the conversion price. Pursuant to the terms of the Certificate of Designations of the Convertible Preferred Stock filed by the Company with the Delaware Secretary of State on January 9, 2023, unless and until approval of the Company’s stockholders is obtained as contemplated by NASDAQ listing rules, no Holder may convert shares of Convertible Preferred Stock through either an optional or a mandatory conversion into shares of common stock if and solely to the extent that the issuance of such shares of common stock would exceed the aggregate number of shares of common stock that is equal to 19.99% of the amount of common stock of the Company outstanding on the date on which we issued the Convertible Preferred Stock (the “Exchange Limit”). Additionally, subject to certain exceptions and waiver by each Holder, the Company will not issue any shares of common stock to any respective Holder to the extent that such issuance of common stock would result in such Holder beneficially owning in excess of 9.99% of the then-outstanding common stock (together with the Exchange Limit, the “Conversion Limits”). Subject to certain conditions, the Company may from time to time, at its option, require conversion of all or any portion of the outstanding shares of Convertible Preferred Stock to common stock if, for at least 20 consecutive trading days during the respective measuring period the closing price of the common stock was at least 150% of the conversion price (the “Mandatory Conversion Right”). The Company may not exercise this Mandatory Conversion Right unless certain conditions with regard to the shares of common stock to be issued upon such conversion are satisfied. Voting Each Holder is entitled to vote with the holders of the shares of common stock on all matters submitted for a vote of holders of shares of common stock (voting together with the holders of shares of common stock as one class). Each Holder is entitled the whole number of votes equal to the number of shares of common stock into which such Holder’s shares of Convertible Preferred Stock would be convertible on the record date for the vote or consent (subject to the Conversion Limits). Registration Rights Agreement On January 9, 2023, in connection with the issuance of the Convertible Preferred Stock, the Company and the Holders also entered into a Registration Rights Agreement (the “Registration Rights Agreement”) pursuant to which, among other things, the Company granted the Holders certain registration rights with respect to the shares of common stock issuable upon conversion of the Convertible Preferred Stock. The Registration Rights Agreement contains monetary penalties if the registration statement is not declared effective by the SEC within 90 days of the issuance of the Convertible Preferred Stock on January 9, 2023, or if earlier, the fifth business day after the SEC notifies the Company that the registration statement is not subject to further review. The Registration Rights Agreement also contains monetary penalties if the Company fails to maintain the effectiveness of the registration statement once deemed effective by the SEC. As of the date of this Quarterly Report on Form 10-Q, the Company has incurred approximately $0.8 million in monetary penalties under the Registration Rights Agreement. Classification The Convertible Preferred Stock is redeemable contingent upon the occurrence of an event that is not probable. Accordingly, the Company has presented the Convertible Preferred Stock outside of permanent equity. The Convertible Preferred Stock was recorded at its issuance date fair value of the net proceeds raised and will not require subsequent measurement until it becomes probable of being redeemable. The Company recorded proceeds of $38.8 million, net of costs associated with the issuance of the Convertible Preferred Stock of approximately $0.7 million approximating $38.1 million. As of February 26, 2023, the Company recorded PIK dividends of approximately $0.4 million as a reduction to Additional Paid in Capital and an increase to the Convertible Preferred Stock balance to $38.5 million. As of February 26, 2023, there were approximately 39,200 shares of Convertible Preferred Stock outstanding. |
Stock-based Compensation and St
Stock-based Compensation and Stockholders' Equity | 9 Months Ended |
Feb. 26, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Stock-based Compensation and Stockholders' Equity | Stock-based Compensation and Stockholders’ Equity Stock-Based Compensation Activity The estimated fair value for stock options, which determines the Company’s calculation of stock-based compensation expense, is based on the Black-Scholes option pricing model. Restricted stock units (“RSUs”) are valued at the closing market price of the Company’s common stock on the grant date. The Company uses the straight-line method to recognize the fair value of stock-based compensation arrangements. During the three months ended February 26, 2023, the Company granted no options to purchase shares of common stock and awarded 77,098 RSUs. During the nine months ended February 26, 2023, the Company granted 743,050 options to purchase shares of common stock and awarded 336,186 RSUs. As of February 26, 2023, the Company has reserved 3.4 million shares of common stock for future issuance under its current and former equity plans. Stock-Based Compensation Expense The Company’s stock-based awards include stock option grants and RSUs. The Company records compensation expense for stock-based awards issued to employees and directors in exchange for services provided based on the estimated fair value of the awards on their grant dates and is recognized over the required service periods, generally the vesting period. The following table summarizes stock-based compensation by income statement line item: Three Months Ended Nine months ended (In thousands) February 26, 2023 February 27, 2022 February 26, 2023 February 27, 2022 Continuing operations: Cost of product sales $ 109 $ 75 307 $ 177 Research and development 31 51 173 151 Selling, general and administrative 763 488 2,316 1,575 Discontinued Operations: Cost of product sales — 8 — 25 Total stock-based compensation $ 903 $ 622 $ 2,796 $ 1,928 As of February 26, 2023, there was $5.0 million of total unrecognized compensation expense related to unvested equity compensation awards granted under the Lifecore incentive stock plans. Total expense is expected to be recognized over the weighted-average period of 2.14 for stock options and 1.95 years for RSUs. Stock Repurchase Plan On July 14, 2010, the Board of Directors of the Company approved the establishment of a stock repurchase plan which allows for the repurchase of up to $10.0 million of the Company’s common stock. The Company may still repurchase up to $3.8 million of the Company’s common stock under the Company’s stock repurchase plan. The Company may repurchase its common stock from time to time in open market purchases or in privately negotiated transactions. The timing and actual number of shares repurchased is at the discretion of management of the Company and will depend on a variety of factors, including stock price, corporate and regulatory requirements, market conditions, the relative attractiveness of other capital deployment opportunities and other corporate priorities. The stock repurchase program does not obligate Lifecore Biomedical to acquire any amount of its common stock and the program may be modified, suspended or terminated at any time at the Company’s discretion without prior notice. During the nine months ended February 26, 2023 and February 27, 2022, the Company did not purchase any shares on the open market or in privately negotiated transactions. |
Diluted Earnings Per Share
Diluted Earnings Per Share | 9 Months Ended |
Feb. 26, 2023 | |
Earnings Per Share [Abstract] | |
Diluted Earnings Per Share | Diluted Earnings Per Share The following table sets forth the computation of diluted earnings per share: Three Months Ended Nine Months Ended (In thousands, except per share amounts) February 26, 2023 February 27, 2022 February 26, 2023 February 27, 2022 Numerator: Net loss $ (40,192) $ (13,086) $ (63,992) $ (61,116) Denominator: Weighted average shares for basic net loss per share 30,304 29,482 29,838 29,459 Effect of dilutive securities: Convertible preferred stock — — — — Stock options and restricted stock units — — — — Weighted average shares for diluted net loss per share 30,304 29,482 29,838 29,459 Basic and Diluted net loss per share $ (1.33) $ (0.45) $ (2.14) $ (2.07) Due to the Company’s net loss for the three and nine months ended February 26, 2023 and February 27, 2022, the net loss per share includes only the weighted average shares outstanding and thus excludes RSUs, stock options and Convertible Preferred Stock, as such impact would be antidilutive. See Note 2 for more information on outstanding convertible preferred stock and Note 3 for more information on outstanding RSUs and stock options. |
Income Taxes
Income Taxes | 9 Months Ended |
Feb. 26, 2023 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | Income Taxes The provision for income taxes from continuing operations for the nine months ended February 26, 2023 and February 27, 2022, was an (expense)/benefit of $(78) thousand and $5.6 million, respectively. The effective tax rate for the nine months ended February 26, 2023 and February 27, 2022 was 0.2% and 32.0%, respectively. The effective tax rate for the nine months ended February 26, 2023, was lower than the statutory federal income tax rate of 21% primarily due to the valuation allowance recorded against certain deferred tax assets, partially offset by the federal and state research and development tax credits. As of both February 26, 2023 and May 29, 2022, the Company had unrecognized tax benefits of $1.0 million. Included in the balance of unrecognized tax benefits as of both February 26, 2023 and May 29, 2022, is $0.9 million of tax benefits that, if recognized, would result in an adjustment to the Company’s effective tax rate. The Company does not expect its unrecognized tax benefits to change significantly within the next twelve months. The Company has elected to classify interest and penalties related to uncertain tax positions as a component of its provision for income taxes. The Company has accrued an insignificant amount of interest and penalties relating to the income tax on the unrecognized tax benefits as of February 26, 2023 and May 29, 2022. |
Debt
Debt | 9 Months Ended |
Feb. 26, 2023 | |
Debt Disclosure [Abstract] | |
Debt | Debt Long-term debt, net consists of the following: (In thousands) February 26, 2023 May 29, 2022 Term loan $ 107,079 $ 103,712 Total principal amount of long-term debt 107,079 103,712 Less: unamortized debt issuance costs (8,115) (5,534) Total long-term debt, net of unamortized debt issuance costs 98,964 98,178 Less: current portion of long-term debt, net — (98,178) Long-term debt, net $ 98,964 $ — On December 31, 2020, the Company refinanced its previously existing term loan and revolving credit facility by entering into (1) a credit agreement Goldman Sachs Specialty Lending Group, L.P. (“Goldman”) and Guggenheim Credit Services, LLC (“Guggenheim”), as lenders, which provided the Company, Curation Foods and Lifecore, as co-borrowers, with term loan borrowings of up to $170.0 million (the “Prior Term Loan Facility”), and (ii) a credit agreement with BMO Harris Bank, N.A. (“BMO”) as lender, which provided the Company, Curation Foods and Lifecore, as co-borrowers, with an up to $75.0 million revolving line of credit (the “Revolving Credit Facility” and together with Prior Term Loan Facility, the “Credit Facilities”). The Revolving Credit Facility is, and the Prior Term Loan Facility was, guaranteed, and secured by, substantially all of the Company’s and the Company’s direct and indirect subsidiaries’ assets. In April 2022 the Company amended the Credit Facilities to make available an additional $20.0 million of term debt that had been previously repaid. In connection with this amendment, the Company incurred debt issuance costs from the lender of $0.7 million. On January 9, 2023, the Company entered into further amendments to the Credit Facilities to, among other things, provide for the limited waiver from events of default under the Credit Facilities related to certain financial covenant requirements, as well as a waiver of certain existing terms and covenants under the Prior Term Loan, including with respect to the fixed coverage ratio leverage ratio and minimum liquidity covenants, 2% increase of annual interest rate, which was payable in kind, and a one-time amendment fee in an amount equal to 3% of the principal amount as of January 9, 2023. This amendment also reduced the maximum commitment under the Revolving Credit Facility from $75.0 million to $60.0 million, which was further reduced to $50.0 million upon the sale of Yucatan. The Prior Term Loan Facility would have matured on December 31, 2025. The Revolving Term Facility matures on December 31, 2025. Interest on the Revolving Credit Facility is based upon the Company’s average availability, at a per annum rate of either (i) SOFR rate plus a spread of between 2.00% and 2.50% or (ii) base rate plus a spread of between 1.00% and 1.50%, plus a commitment fee, as applicable, of 0.375% and plus (iii) for the period from December 1, 2022 until January 31, 2023, additional 2% per annum . Interest on the Prior Term Loan Facility was at a per annum rate based on either (i) the base rate plus a spread of 7.50% or (ii) the SOFR rate plus a spread of 8.50%. The Prior Term Loan Credit Facility also provided that in the event of a prepayment of any amount other than the scheduled installments within twelve months after the closing date, a penalty will be assessed equal to the aggregate amount of interest that would have otherwise been payable from date of prepayment event until twelve months after the closing date plus 3% of the amount prepaid. The Revolving Credit Facility contains, and the Prior Term Loan Facility contained, customary financial covenants and events of default under which the obligations thereunder could be accelerated and/or the interest rate increased in specified circumstances. In connection with the January 2023 amendments to the Credit Facilities, the Company incurred debt issuance costs from the lender and third-parties of $1.1 million and $62.5 thousand, respectively, during the nine months ended February 26, 2023. As of February 26, 2023, the Company had $16.0 million in borrowings outstanding under the Amended Revolver Credit Facility, at an effective annual interest rate of 7.2%. As of February 26, 2023, the Company had $107.0 million in borrowings outstanding under the Prior Term Loan Facility, at an effective annual interest rate of 13.2%. As the Company was able to refinance the Term Debt with New Term Debt subsequent to February 26, 2023 but prior to the filing of this Quarterly Report on Form 10-Q, we have classified the obligation as long term as of our balance sheet date. As of February 26, 2023, the Company was not in compliance with all financial covenants under the Credit Facilities. As further described in Note 10 – Subsequent Events, on May 22, 2023, the Company entered into the New Term Loan Facility, and concurrently therewith, terminated the Prior Term Loan Facility and repaid the borrowings outstanding thereunder, and entered into a further amendment to the Revolving Credit Facility, at which time the Company was in compliance with all financial covenants under the New Term Loan Facility and the Revolving Credit Facility. Derivative Instruments On November 1, 2016, the Company entered into an interest rate swap contract (the “2016 Swap”) with BMO at a notional amount of $50.0 million. The 2016 Swap had the effect of changing the Company’s previous term loan obligation from a variable interest rate to a fixed 30-day LIBOR rate of 1.22%. The 2016 Swap matured in September 2021. On June 25, 2018, the Company entered into an interest rate swap contract (the “2018 Swap”) with BMO at a notional amount of $30.0 million. The 2018 Swap had the effect on the Company’s previous debt of converting the first $30.0 million of the total outstanding amount of the Company’s 30-day LIBOR borrowings from a variable interest rate to a fixed 30-day LIBOR rate of 2.74%. The 2018 Swap matured in September 2021. On December 2, 2019, the Company entered into an interest rate swap contract (the “2019 Swap”) with BMO at a notional amount of $110.0 million which decreases quarterly. The 2019 Swap had the effect on our previous debt of converting primarily all of the $110.0 million of the total outstanding amount of the Company’s 30-day LIBOR borrowings from a variable interest rate to a fixed 30-day LIBOR rate of 1.53%. The 2019 Swap matured in November 2022. |
Business Segment Reporting
Business Segment Reporting | 9 Months Ended |
Feb. 26, 2023 | |
Segment Reporting [Abstract] | |
Business Segment Reporting | Business Segment Reporting The Company historically operated using three strategic reportable business segments, aligned with how the Chief Executive Officer, who is the chief operating decision maker (“CODM”), manages the business: the Lifecore segment, the Curation Foods segment, and the Other segment. The Lifecore segment sells products utilizing hyaluronan, a naturally occurring polysaccharide that is widely distributed in the extracellular matrix of connective tissues in both animals and humans, and non-HA products for medical use primarily in the Ophthalmic, Orthopedic and other markets. The Curation Foods business included activities from three natural food brands, including O Olive Oil & Vinegar, Yucatan Foods, and Cabo Fresh. The Curation Foods segment includes sales of olive oils and wine vinegars under the O brand, and sales of avocado products under the brands Yucatan Foods and Cabo Fresh. In December 2021, the Company completed the Eat Smart Disposition and on February 7, 2023 the Company completed the sale of the avocado products business, including its Yucatan® and Cabo Fresh® brands. As a result, the Company met the requirements of ASC 205-20 to report the results of the Eat Smart and Yucatan Foods businesses as discontinued operations. The operating results for the Eat Smart and Yucatan Foods businesses, in all periods presented, have been reclassified to discontinued operations and are no longer reported in the Curation Foods business segment. See Note 1 – Organization, Basis of Presentation, and Summary of Significant Accounting Policies – Yucatan Foods and Discontinued Operations for further discussion. The Other segment includes corporate general and administrative expenses, non-Lifecore and non-Curation Foods interest expense, interest income, and income tax expenses. Corporate overhead is allocated between segments based on actual utilization and relative size. All of the Company’s assets are located within the United States of America. The Company’s international sales by geography are based on the billing address of the customer and were as follows, excluding discontinued operations: Three Months Ended Nine Months Ended (In millions) February 26, 2023 February 27, 2022 February 26, 2023 February 27, 2022 Switzerland $ 6.8 $ 8.2 $ 14.8 $ 13.6 Canada 0.7 0.2 1.9 1.4 Czech Republic 0.7 0.7 2.4 2.4 Ireland 1.1 0.5 2.9 1.3 Australia 1.1 — 1.1 — United Kingdom 0.6 0.9 1.4 2.2 All Other Countries 0.2 1.6 0.4 1.9 Operations by business segment consisted of the following: (In thousands) Lifecore Curation Foods Other Total Three Months Ended February 26, 2023 Net sales $ 26,330 $ 1,270 $ — $ 27,600 Gross profit 6,072 (94) — 5,978 Net (loss) income from continuing operations 851 280 (16,592) (15,461) Loss from discontinued operations, net of tax — (22,802) (1,929) (24,731) Depreciation and amortization 1,878 243 10 2,131 Interest income 16 — 6 22 Interest expense — — 5,818 5,818 Income tax (benefit) expense 268 (3,019) 2,821 70 Corporate overhead allocation 739 241 (980) — Nine Months Ended February 26, 2023 Net sales $ 71,723 $ 6,025 $ — $ 77,748 Gross profit 18,847 723 — 19,570 Net (loss) income from continuing operations 2,269 (1,974) (35,008) (34,713) Loss from discontinued operations, net of tax — (27,350) (1,929) (29,279) Depreciation and amortization 5,492 2,637 31 8,160 Dividend income — — — — Interest income 47 — 6 53 Interest expense — 1 13,714 13,715 Income tax (benefit) expense 717 (4,135) 3,496 78 Corporate overhead allocation 2,799 858 (3,657) — (In thousands) Lifecore Curation Foods Other Total Three Months Ended February 27, 2022 Net sales $ 34,808 $ 2,591 $ — $ 37,399 Gross profit 12,905 (39) — 12,866 Net (loss) income from continuing operations 5,054 (5,380) (6,312) (6,638) Loss from discontinued operations, net of tax — (3,407) (3,041) (6,448) Depreciation and amortization 1,674 304 18 1,996 Interest income 18 — 2 20 Interest expense — 26 4,079 4,105 Income tax (benefit) expense 1,596 (1,678) (5) (87) Corporate overhead allocation 1,175 289 (1,464) — Nine Months Ended February 27, 2022 Net sales $ 81,707 $ 8,433 $ — $ 90,140 Gross profit 30,384 1,249 — 31,633 Net (loss) income from continuing operations 11,317 4,640 (27,340) (11,383) Loss from discontinued operations, net of tax — (46,692) (3,041) (49,733) Depreciation and amortization 4,894 364 70 5,328 Interest income 57 — 9 66 Interest expense — 300 13,577 13,877 Income tax (benefit) expense 3,574 (13,422) 4,257 (5,591) Corporate overhead allocation 3,389 778 (4,167) — During the nine months ended February 26, 2023 and February 27, 2022, the Company had sales concentrations of 10% or greater from two customers. The Company’s top two customers, from the Lifecore segment, accounted for 37% and 15% of total revenues for the nine months ended February 26, 2023, and 17% and 13% for the nine months ended February 27, 2022. The Company had accounts receivable concentrations of 10% or greater from two customers accounting for 47% and 10% of accounts receivable as of February 26, 2023, and two customers as of February 27, 2022 accounting for 25% and 19%. |
Restructuring Costs
Restructuring Costs | 9 Months Ended |
Feb. 26, 2023 | |
Restructuring and Related Activities [Abstract] | |
Restructuring Costs | Restructuring Costs 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 includes a reduction-in-force, a reduction in leased office spaces and the sale of non-strategic assets. The following table summarizes the restructuring costs recognized in the Company’s Consolidated Statements of Comprehensive (Loss) Income, by Business Segment, excluding discontinued operations. There were no restructuring costs recognized on the Lifecore segment. (in thousands) Curation Foods Other Total Three Months Ended February 26, 2023 Employee severance and benefit costs $ 683 $ 1,679 $ 2,362 Lease costs 43 — 43 Other restructuring costs 175 161 336 Total restructuring costs $ 901 $ 1,840 $ 2,741 (in thousands) Curation Foods Other Total Nine Months Ended February 26, 2023 Employee severance and benefit costs 927 1,679 2,606 Lease costs 88 — 88 Other restructuring costs 494 1,423 1,917 Total restructuring costs $ 1,509 $ 3,102 $ 4,611 Employee severance and benefit costs Employee severance and benefit costs are costs incurred as a result of reduction-in-force driven by our restructuring plan and closure of offices and facilities. These costs were driven primarily by reduction-in-force related to our Curation Foods segment. Lease Costs In August 2020, the Company closed its leased Santa Clara, California office and entered into a sublease agreement. In the fourth quarter of fiscal year 2020 the Company closed its leased Los Angeles, California office and plans to sublease the office. The Company approved a plan to explore opportunities to sub lease its Santa Maria office and expects to complete the sublease plan within the next 12 months. Other restructuring costs Other restructuring costs are primarily related to consulting costs incurred in connection with the execution of the Company’s 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. The following table summarizes the restructuring costs recognized in the Company’s Consolidated Statements of (Loss) Income, by Business Segment, since inception of the restructuring plan in fiscal year 2020 through the nine months ended February 26, 2023, excluding discontinued operations: Curation Foods Other Total (in thousands) Asset write-off costs, net $ 7,552 $ 418 $ 7,970 Employee severance and benefit costs 1,486 2,463 3,949 Lease costs 2,306 26 2,332 Other restructuring costs 817 6,321 7,138 Total restructuring costs $ 12,161 $ 9,228 $ 21,389 The total expected cost related to the restructuring plan is approximately $23.0 million. |
Discontinued Operations
Discontinued Operations | 9 Months Ended |
Feb. 26, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Discontinued Operations | Discontinued Operations As discussed in Note 1 – Organization, Basis of Presentation, and Summary of Significant Accounting Policies – Yucatan Disposition and Discontinued Operations, on February 7, 2023, we completed the Yucatan Disposition. Yucatan Foods represented a component of the business within the Curation Foods segment and its sale represents a strategic shift in the Company going forward. Accordingly, concurrent with the execution of the Securities Purchase Agreement, Yucatan meets the accounting requirements for reporting as discontinued operations for all periods presented. The Discontinued Operations includes the operations of Eat Smart prior to its sale. There were no assets or liabilities of Yucatan Foods as of February 26, 2023. The assets and liabilities of Yucatan as of May 29, 2022 were as follows (in thousands): May 29, 2022 ASSETS Cash and cash equivalents $ 652 Accounts receivable, less allowance for credit losses 8,078 Inventories 22,545 Prepaid expenses and other current assets 1,869 Total current assets, discontinued operations 33,144 Property and equipment, net 3,500 Operating lease right-of-use assets 2,061 Trademarks/tradenames, net 4,000 Customer relationships, net 1,400 Other assets 102 Total other non-current assets, discontinued operations 11,063 Total assets, discontinued operations $ 44,207 LIABILITIES Accounts payable $ 2,814 Accrued compensation 297 Other accrued liabilities 800 Current portion of lease liabilities 434 Total current liabilities, discontinued operations 4,345 Long-term lease liabilities 1,627 Non-current liabilities, discontinued operations 1,627 Total liabilities, discontinued operations $ 5,972 The key components of income from discontinued operations for the three and nine months ended February 26, 2023 and February 27, 2022 were as follows (in thousands): Three Months Ended Nine Months Ended February 26, 2023 February 27, 2022 February 26, 2023 February 27, 2022 Product sales $ 10,811 $ 29,234 $ 42,820 $ 234,773 Cost of product sales 12,571 29,041 44,812 222,948 Gross profit (1,760) 193 (1,992) 11,825 Operating costs and expenses: Research and development — 159 2 1,981 Selling, general and administrative 1,902 3,245 5,216 19,804 Impairment of intangible asset and goodwill — — 1,000 32,057 Loss on sale of Eat Smart — 235 — 235 Loss on Sale of Yucatan 21,039 21,039 Restructuring costs 30 3,209 30 4,642 Total operating costs and expenses 22,971 6,848 27,287 58,719 Operating loss (24,731) (6,655) (29,279) (46,894) Interest expense — (204) — (2,682) Loss from discontinued operations before taxes (24,731) (6,859) (29,279) (49,576) Income tax benefit (expense) — 411 — (157) Loss from discontinued operations, net of tax $ (24,731) $ (6,448) $ (29,279) $ (49,733) Cash provided by operating activities by the Yucatan business totaled $0.1 million and $2.9 million for the nine months ended February 26, 2023 and 2022, respectively. There was no cash used in investing activities from the Yucatan business for the nine months ended February 26, 2023 and $2.5 million cash used in investing activities from the Yucatan business for the nine months ended February 27, 2022. Depreciation and amortization expense of the Yucatan business totaled $0.1 million and $0.8 million for the three months ended February 26, 2023 and 2022, respectively, and $0.5 million and $2.8 million for the nine months ended February 26, 2023 and 2022, respectively. There were no capital expenditures of the Yucatan business for the nine months ended February 26, 2023 and $2.5 million of capital expenditures for the nine months ended February 27, 2022. There was no cash used, provided by, nor any capital expenditures of, the Eat Smart business for the nine months ended February 26, 2023. Cash used in operating activities and cash provided by investing activities by the Eat Smart business totaled $5.5 million and $117.8 million for the nine months ended February 27, 2022, respectively. Depreciation and amortization expense of the Eat Smart business totaled $0.3 million and $5.1 million for the three and nine months ended February 27, 2022. Capital expenditures of the Eat Smart business totaled $1.9 million for the nine months ended February 27, 2022. |
Subsequent Events
Subsequent Events | 9 Months Ended |
Feb. 26, 2023 | |
Subsequent Events [Abstract] | |
Subsequent Events | Subsequent Events Sale of O Olive Oil and Vinegar Business On April 6, 2023, the Company completed the sale of its O Olive Oil and Vinegar Business. (“O Olive Sale ” ) for an aggregate purchase price of $6.2 million, subject to certain customary post-closing adjustments, consisting of approximately $3.1 million in cash and $3.1 million seller's note. The seller’s note matures on March 31, 2026, accrues interest at a rate of 12% payable in kind beginning on October 31, 2023, and is prepayable by the buyer at any time. Net proceeds from the transaction were used to repay borrowings under the Company’s credit facilities. The results of operations related to the O Olive business will be reported as discontinued operations beginning in the fourth quarter ended May 28, 2023. The Company is in the process of analyzing the results of the O Olive Sale, however it expects to recognize a loss on the O Olive Sale in the fourth quarter ended May 28, 2023. A potential range of losses cannot be estimated at this time. Alcon Supply Agreement On May 3, 2023, the Company entered into an Amended and Restated Supply Agreement (the “ Supply Agreement ”), dated May 3, 2023, with Alcon, which amended and restated certain existing supply agreements entered into between the Company and Alcon-Couvreur N.V., an affiliate of Alcon, related to the Company’s manufacture and supply of sodium hyaluronate (“ HA ”) for Alcon. The initial term of the Supply Agreement expires December 31, 2033. Following the initial term, the Supply Agreement automatically extends for an additional two-year term unless Alcon provides the Company with a notice of non-renewal prior to the expiration of the initial term. The Supply Agreement also contains certain termination provisions which provide that the agreement may be terminated (a) by Alcon upon six months’ written notice to the Company, or (b) by either party if the other party fails to perform or otherwise breaches any of its material obligations under the Supply Agreement, the non-breaching party notifies the breaching party of its intent to terminate the Supply Agreement, and the breaching party fails to cure such breach. The Supply Agreement contains terms and provisions customary for transactions of this type, including product warranties and confidentiality and indemnification obligations. Orders of HA pursuant to the Supply Agreement are based on customary forecasting mechanics and are payable by Alcon based on certain prices that are subject to annual index-based adjustments. Pursuant to the Supply Agreement, the Company is also required to commit certain HA manufacturing capacity based on Alcon’s forecasts. Alcon and the Company have also agreed to negotiate in good faith to finalize a plan to increase the Company’s HA manufacturing capacity to meet the anticipated volumes. In the event the Company is unable to supply the agreed-upon volumes and safety stock pursuant to the Supply Agreement, under certain circumstances, Alcon will be entitled to certain rights with respect to the manufacturing and supply of HA for Alcon. New Term Loan Credit Facility On May 22, 2023, the Company , Curation and Lifecore Biomedical (together with the Company and Curation, the “ Borrowers ”), certain of the Company’s other subsidiaries, as guarantors, and Alcon , as administrative agent, collateral agent and lender, entered into that certain Credit and Guaranty Agreement (the “New Term Loan Credit Facility ”). The New Term Loan Credit Facility refinanced in full all obligations of the Borrowers and their subsidiaries under the Prior Term Loan Credit Facility, which was terminated upon the entry into the New Term Loan Credit Facility and all noncompliance with debt covenants was thereby cured. The New Term Loan Credit Facility provides for up to $140.0 million in term loans, subject to certain adjustments based on the post-closing adjustments to the Purchase Price (as defined in the Equipment Sale and Leaseback Agreement, defined below), which were funded in full on May 22, 2023. The obligations under the New Term Loan Credit Facility mature on May 22, 2029. The New Term Loan Credit Facility is secured by the same collateral that secures the Revolving Credit Facility (as defined below), with relative priorities in respect thereof, as set forth in the Intercreditor Agreement (as defined below). The loans under the New Term Loan Credit Facility have a fixed interest rate equal to 10% per annum. Interest is payable-in-kind until the third anniversary of the closing date and following the third anniversary of the closing date is payable at a rate equal to 3% per annum in cash with the remainder payable-in-kind, in each case, unless otherwise elected by the Borrowers to pay a greater proportion in cash. The New Term Loan Credit Facility contains customary affirmative covenants including, but not limited to, financial reporting requirements and maintenance of existence requirements and negative covenants, including, but not limited to, limitations on the incurrence of debt, liens, investments, restricted payments, restricted debt payments, and affiliate transactions. The New Term Loan Credit Facility contains one financial covenant, a minimum liquidity covenant, requiring $4.0 million of Consolidated Liquidity (as defined in the New Term Loan Credit Facility) as of the end of each fiscal quarter of the Company. In connection with the New Term Loan Facility, the Company wrote off deferred financing costs amounting to $7.5 million and paid prepayment penalties of $12.9 million to our prior term loan lenders. Pledge and Security Agreement Also on May 22, 2023, the Borrowers and certain of the Company’s other subsidiaries, as grantors (collectively, the “ Grantors ”), entered into that certain Pledge and Security Agreement (the “ Term Loan Security Agreement ”), dated as of May 22, 2023, with Alcon, as collateral agent. Pursuant to the Term Loan Security Agreement, the Grantors secured their obligations under the New Term Loan Credit Facility by granting to Alcon, as collateral agent, a first priority security interest in certain collateral, including but not limited to equipment, fixtures, real property and intellectual property. The security interest granted by the Grantors under the Term Loan Security Agreement continues in effect until the payment in full of all of the secured obligations under the New Term Loan Credit Facility. Amendment to Revolving Credit Agreement On May 22, 2023, the Borrowers and certain of the Company’s other subsidiaries, as guarantors, entered into a Limited Waiver, Consent and Fifth Amendment (the “ Revolving Loan Amendment ”) to the Revolving Credit Facility The Revolving Loan Amendment provides for, among other things, (i) a waiver of all known existing defaults under the Revolving Credit Agreement as of the date of the Revolving Loan Amendment, (ii) the reduction of the maximum amount available under the Revolving Credit Agreement to up to the lesser of (x) $40.0 million, less a reserve for certain secured credit products, if any, and (y) the borrowing base (which, pursuant to the Revolving Loan Amendment, was modified to include a further reduction of the borrowing base by an additional $4.0 million), (iii) the modification of the springing minimum fixed charge coverage ratio of 1.00 to 1.00, with such covenant not tested until the fiscal quarter ending on or about February 28, 2024 and, on or thereafter, upon the earlier of the occurrence of an Event of Default or availability being less than the greater of 10% of the maximum borrowing amount and $4.0 million, (iv) cash dominion at all times the Revolving Credit Facility remains outstanding, and (v) certain other revisions to align with the terms of the New Term Loan Credit Facility and address the relative priorities and credit for borrowings related to the Company’s commercial relationships with Alcon. In connection with the entry into the Revolving Loan Amendment, the Company also agreed to pay to BMO an amendment fee of $1.2 million, $800,000 of which is paid concurrently with the Company’s entry into the Revolving Loan Amendment, with the remaining $400,000 payable upon the earlier of (i) repayment in full of the Company’s obligations, and termination of all commitments, under the Revolving Credit Facility and (ii) the occurrence of a Change of Control (as defined in the Revolving Credit Facility). BMO and Alcon also entered into an intercreditor agreement regarding their relative rights, as lenders, in the assets of the Company and its subsidiaries that serve as collateral for their respective credit facilities (the “ Intercreditor Agreement ”). In connection with the Revolving Loan Amendment, the Company wrote off deferred financing costs amounting to $0.6 million during the fourth quarter of fiscal year 2023. As the Company's borrowings under the Amended Loan Amendments for the next twelve months will increase to above the $16.0 million as of the balance sheet date, and scheduled repayments is not due until December 31, 2025, we have determined the line of credit to be classified as a long-term liability as of February 26, 2023. Equipment Sale and Leaseback Agreements On May 22, 2023, the Company entered into that certain Equipment Sale and Leaseback Agreement (the “ Equipment Sale and Leaseback Agreement ” and, together with the Equipment Sale Leaseback Agreement, the New Term Loan Credit Facility, the Term Loan Security Agreement, and the Revolving Loan Amendment, collectively, the “Refinancing Transactions”), dated May 22, 2023, with Alcon, wherein the Company sold $10.0 million (subject to certain post-closing adjustments) (the “ Purchase Price ”) of certain equipment, machinery, and other property associated with the production of sodium hyaluronate (the “ Equipment ”) to Alcon. The Equipment Sale Leaseback Agreement contains an option for the Company to repurchase the Equipment upon the earlier of (i) seven (7) years and (ii) the expansion of the Company’s existing production capacity with respect to sodium hyaluronate, for a purchase price equal to the Purchase Price, less the aggregate of all Paydown Payments (as defined in the Equipment Lease Agreement). Concurrently with the entry into the Equipment Sale and Leaseback Agreement, the Company entered into that certain Equipment Lease Agreement (the “ Equipment Lease Agreement ”), dated May 22, 2023, with Alcon, wherein Alcon leased the Equipment back to the Company. The Equipment Lease Agreement expires upon the earlier of (i) May 22, 2033, and (ii) the date that the Equipment is repurchased by the Company pursuant to the terms of the Equipment Lease Agreement. Upon the expiration of the Equipment Lease Agreement on May 22, 2033, the Company shall automatically repurchase the Equipment for $1.00 (if not previously repurchased pursuant to the option under the Equipment Sale and Leaseback Agreement). During the lease term, the Company is obligated to make quarterly rental payments to Alcon equal to (i) 1/40 th of the Purchase Price (the “ Paydown Payments ”), plus (ii) 1.5% times the Purchase Price less cumulative Paydown Payments made. The Equipment Lease Agreement contains terms and provisions (including representations, covenants and conditions) that are generally customary for a commercial lease of this nature, including obligations relating to the use, operation and maintenance of the Equipment. During the term of the lease, Alcon is not permitted to sell or encumber the Equipment. Alcon is only entitled to cancel the Equipment Lease Agreement in the event of insolvency, liquidation or bankruptcy, and its remedies for other breaches of the Equipment Lease Agreement are otherwise limited to monetary damages. |
Organization, Basis of Presen_2
Organization, Basis of Presentation, and Summary of Significant Accounting Policies (Policies) | 9 Months Ended |
Feb. 26, 2023 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying unaudited consolidated financial statements of Lifecore Biomedical have been prepared in accordance with U.S. Generally Accepted Accounting Principles (“GAAP”) for interim financial information and with the instructions for Form 10-Q and Article 10 of Regulation S-X. In the opinion of management, all adjustments (consisting of normal recurring accruals) have been made which are necessary to present fairly the financial position of the Company at February 26, 2023, and the results of operations and cash flows for all periods presented. Although Lifecore Biomedical believes that the disclosures in these financial statements are adequate to make the information presented not misleading, certain information normally included in financial statements and related footnotes prepared in accordance with GAAP have been condensed or omitted in accordance with the rules and regulations of the Securities and Exchange Commission (the “SEC”). The accompanying financial data should be reviewed in conjunction with the audited financial statements and accompanying notes included in Lifecore Biomedical’s Annual Report on Form 10-K/A for the fiscal year ended May 29, 2022 (the “Annual Report”). |
Fiscal Period | The Company’s fiscal year is the 52- or 53-week period that ends on the last Sunday of May with quarters within each year ending on the last Sunday of August, November, and February; however, in instances where the last Sunday would result in a quarter being 12-weeks in length, the Company’s policy is to extend that quarter to the following Sunday. A 14th week is included in the fiscal year every five or six years to realign the Company’s fiscal quarters with calendar quarters. The results of operations for the three and nine months ended February 26, 2023 are not necessarily indicative of the results that may be expected for an entire fiscal year because there is some seasonality in the order patterns of Lifecore’s customers which may lead to significant fluctuations in Lifecore Biomedical’s quarterly results of operations. |
Basis of Consolidation | Basis of Consolidation The consolidated financial statements are presented on the accrual basis of accounting in accordance with GAAP and include the accounts of Lifecore Biomedical and its subsidiaries, Lifecore and Curation Foods. All material inter-company transactions and balances have been eliminated. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with GAAP requires management to make certain estimates and judgments that affect the amounts reported in the financial statements and accompanying notes. The accounting estimates that require management’s most significant and subjective judgments include revenue recognition; loss contingencies; sales returns and credit losses; recognition and measurement of current and deferred income tax assets and liabilities; the assessment of recoverability of long-lived and indefinite lived assets (including intangible assets and goodwill), and inventory; and the valuation and recognition of stock-based compensation. These estimates involve the consideration of complex factors and require management to make judgments. The analysis of historical and future trends can require extended periods of time to resolve and are subject to change from period to period. The actual results may differ from management’s estimates. Going Concern Update As disclosed in the Company’s previous filings, the Company had previously determined that there were factors, which was principally the result of our noncompliance with financial covenants, that raised substantial doubt about its ability to continue as a going concern. Since that time, the Company has taken measures to strengthen its financial position, including the repayment and termination of the Prior Term Loan Facility, and the entry into the Refinancing Transactions (defined below), in each case, on May 22, 2023. The Refinancing Transactions provided the Company with additional liquidity, eliminated the Company’s noncompliance with its financial covenants under Credit Facilities (including granting the Company applicable waivers under the Revolving Term Loan Facility), reduced the Company’s near-term debt service costs, and eliminated certain financial covenants that existed under the Prior Term Loan Facility. In addition, the completion of the Company’s sale of the Yucatan and O Olive business, and the entry into an amended and restated supply agreement with Alcon Research, LLC (“Alcon”) to extend and expand its prior supply agreement, as further described in Note 10 – Subsequent Events, also provided the Company with additional liquidity. The cash provided under the Refinancing Transactions, completed divestitures of remaining Curation Foods businesses, and the lower debt service costs under our Refinancing Transactions provide improved forecasted cash flow from operations that allow sufficient liquidity over the next 12 months to meet our obligations as they come due. Based on the foregoing, management believes that our cash position as of the date of filing these financial statement (the “Filing Date”) and forecasted cash flow from operations is sufficient to meet capital and liquidity requirements for at least the next 12 months. As a result, there is no longer substantial doubt about the Company’s ability to continue as a going concern. |
Cash and Cash Equivalents | Cash and Cash Equivalents The Company records all highly liquid securities with three months or less from date of purchase to maturity as cash equivalents. Cash equivalents consist mainly of money market funds. The market value of cash equivalents approximates their historical cost given their short-term nature. |
Inventories | InventoriesIf the cost of the inventories exceeds their net realizable value, provisions are recorded currently to reduce them to net realizable value. The Company also records a provision for slow moving and obsolete inventories based on the estimate of demand for its products. |
Accounts Receivable, Sales Returns and Allowance for Credit Losses | Accounts Receivable, Sales Returns and Allowance for Credit Losses The Company carries its accounts receivable at their face amounts less an allowance for estimated sales returns and credit losses. Sales return allowances are estimated based on historical sales return amounts. The Company uses the loss rate method to estimate its expected credit losses on trade accounts receivable and contract assets. In order to estimate expected credit losses, the Company assessed recent historical experience, current economic conditions and any reasonable and supportable forecasts to identify risk characteristics that are shared within the financial asset. These risk characteristics are then used to bifurcate the loss rate method into risk pools. The risk pools were determined based on the industries in which the Company operates. Historical credit loss for each risk pool is then applied to the current period aging as presented in the identified risk pools to determine the needed reserve allowance. At times when there are no current economic conditions or forecasts that may affect future credit losses, the Company has determined that recent historical experience provides the best basis for estimating credit losses. The information obtained from assessing historical experience, current economic conditions and reasonable and supportable forecasts were used to identify risk characteristics that can affect future credit loss experience. There were no significant risk characteristics identified in the review of historical experiences or in the review of estimates of current economic conditions and forecasts. Estimating credit losses based on risk characteristics requires significant judgment by management. Significant judgments include, but are not limited to: assessing current economic conditions and the extent to which they are relevant to the existing characteristics of the Company’s financial assets, the estimated life of financial assets, and the level of reliance on historical experience in light of economic conditions. The Company will continually review and update, when necessary, its historical risk characteristics that are meaningful to estimating credit losses, any new risk characteristics that arise in the natural course of business, and the estimated life of its financial assets. |
Debt Issuance Costs | Debt Issuance CostsThe Company records its line of credit debt issuance costs as an asset |
Financial Instruments | Financial Instruments The Company’s financial instruments are primarily composed of commercial-term trade payables, debt instruments, and derivative instruments. For short-term instruments, the historical carrying amount approximates the fair value of the instrument. The fair value of long-term debt and lines of credit approximates their carrying value. Cash Flow Hedges The Company has entered into interest rate swap agreements to manage interest rate risk. These derivative instruments may offset a portion of the changes in interest expense. The Company designates these derivative instruments as cash flow hedges. The Company accounts for its derivative instruments as either an asset or a liability and carries them at fair value in Other assets or Other non-current liabilities. The accounting for changes in the fair value of the derivative instrument depends on the intended use of the derivative instrument and the resulting designation. For derivative instruments that hedge the exposure to variability in expected future cash flows and are designated as cash flow hedges, the entire change in the fair value of the hedging instrument is recorded as a component of Accumulated other comprehensive loss (“AOCL”) in Stockholders’ Equity. Those amounts are subsequently reclassified to earnings in the same line item in the Consolidated Statements of Comprehensive (Loss) Income as impacted when the hedged item affects earnings. To receive hedge accounting treatment, cash flow hedges must be highly effective in offsetting changes to expected future cash flows on hedged transactions. During the third quarter of fiscal year 2021, the Company discontinued its hedge accounting prospectively since it was determined that the derivatives are no longer highly effective in offsetting changes in the net investment. The derivatives continue to be carried at fair value in the accompanying Consolidated Balance Sheets with changes in their fair values from the date of discontinued hedge accounting recognized in current period earnings in Other income (expense), net in the Consolidated Statements of Comprehensive (Loss) Income. Amounts previously accumulated in AOCL during the period of effectiveness will continue to be realized over the remaining term of the underlying forecasted debt payments as a component of AOCL in Stockholders’ Equity. Accumulated Other Comprehensive Loss |
Leases | Leases Under Topic 842, the Company determines if an arrangement is a lease at inception. Right-of-use (“ROU”) assets and liabilities are recognized at commencement date based on the present value of remaining lease payments over the lease term. For this purpose, the Company considers only payments that are fixed and determinable at the time of commencement. As most of the leases do not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at the commencement date in determining the present value of lease payments. The incremental borrowing rate is a quoted rate based on the understanding of what the Company’s credit rating would be. Certain agreements may contain the option to extend the lease term, terminate the lease before the contractual expiration date, or purchase the leased asset. The Company, when reasonably certain to exercise the option, considers these options in determining the measurement of the lease. The Company’s lease agreements do not contain any material residual value guarantees. The Company’s lease agreements generally contain lease and non-lease components. Non-lease components primarily include payments for maintenance and utilities. The Company combines fixed payments for non-lease components with lease payments and accounts for them together as a single lease component which increases the amount of lease assets and liabilities. |
Long-lived and Indefinite-Lived Intangible Assets | Long-lived and Indefinite-Lived Intangible Assets The Company’s intangible assets are comprised of customer relationships with a finite estimated useful life of 12 years, and trademarks/tradenames and goodwill with indefinite useful lives. |
Fair Value Measurements | Fair Value Measurements The Company uses fair value measurement accounting for financial assets and liabilities and for financial instruments and certain other items measured at fair value. The Company has elected the fair value option for its investment in a non-public company. The Company has not elected the fair value option for any of its other eligible financial assets or liabilities. The accounting guidance established a three-tier hierarchy for fair value measurements, which prioritizes the inputs used in measuring fair value as follows: Level 1 – observable inputs such as quoted prices for identical instruments in active markets. Level 2 – inputs other than quoted prices in active markets that are observable either directly or indirectly through corroboration with observable market data. Level 3 – unobservable inputs in which there is little or no market data, which would require the Company to develop its own assumptions. As of February 26, 2023 and May 29, 2022, the Company held certain assets and liabilities that are required or it elected to be measured at fair value on a recurring basis, including its interest rate swap contracts. As of May 29, 2022, related to the assets of Curation Foods’ BreatheWay packaging technology business, the Company had $1.0 million in Prepaid expenses and other current assets within the Consolidated Balance Sheet meeting the criteria of held for sale. These assets are recognized at the lower of cost or fair value less cost to sell using market approach. The fair value of these assets are classified as level 3 in the fair value hierarchy due to a mix of unobservable inputs utilized such as independent research in the market as well as actual quotes from market participants. |
Revenue Recognition | Revenue Recognition The Company follows the five step, principles-based model to recognize revenue upon the transfer of promised goods or services to customers and in an amount that reflects the consideration for which the Company expects to be entitled in exchange for those goods or services. Revenue, net of estimated allowances and returns, is recognized when or as the Company satisfies its performance obligations under a contract and control of the product is transferred to the customer. Lifecore Lifecore generates revenue from two integrated activities: CDMO and Fermentation. CDMO is comprised of aseptic and development services. Lifecore’s standard terms of sale are generally included in its contracts and purchase orders. Shipping and other transportation costs charged to customers are recorded in both revenue and cost of goods sold. Lifecore has elected to account for shipping and handling as fulfillment activities, and not as a separate performance obligation. Lifecore’s standard payment terms with its customers generally range from 30 days to 60 days. Aseptic Lifecore provides aseptic formulation and filling of syringes and vials with precisely formulated medical grade HA and non-HA materials for injectable products used for medical purposes. In instances where our customers contract with us to aseptically fill syringes or vials with our HA, the goods are not distinct in the context of the contract. Lifecore recognizes revenue for these products at the point in time when legal title to the product is transferred to the customer, which is at the time that shipment is made or upon delivery of the product. Development Services Lifecore provides product development services to assist its customers in obtaining regulatory approval for the commercial sale of their drug product. These services include activities such as technology development, material component changes, analytical method development, formulation development, pilot studies, stability studies, process validation and production of materials for use within clinical studies. The Company’s customers benefit from the expertise of its scientists who have extensive experience performing such tasks. Each of the promised goods and services are not distinct in the context of the contract as the goods and services are highly interdependent and interrelated. The services described above are significantly affected by each other because Lifecore would not be able to fulfill its promise by transferring each of the goods or services independently. Revenues generated from development services arrangements are recognized over time as Lifecore is creating an asset without an alternate use as it is unique to the customer. Furthermore, the Company has an enforceable right to payment for the performance completed to date for its costs incurred in satisfying the performance obligation plus a reasonable profit margin. For each of the development activities performed by Lifecore as described above, labor is the primary input (i.e., labor costs represent the majority of the costs incurred in the completion of the services). The Company determined that labor hours are the best measure of progress as it most accurately depicts the effort extended to satisfy the performance obligation over time. Fermentation Lifecore manufactures and sells pharmaceutical-grade sodium hyaluronate (“HA”) in bulk form to its customers. The HA produced is distinct as customers are able to utilize the product provided under HA supply contracts when they obtain control. Lifecore recognizes revenue for these products at the point in time when legal title to the product is transferred to the customer, which is at the time that shipment is made or upon delivery of the product to our customer. Curation Foods Curation Foods’ standard terms of sale, both prior to and following the Eat Smart Disposition and Yucatan Disposition, are generally included in its contracts and purchase orders. Revenue is recognized at the time shipment is made or upon delivery as control of the product is transferred to the customer. Shipping and other transportation costs charged to customers are recorded in both revenue and cost of goods sold. Curation Foods has elected to account for shipping and handling as fulfillment activities, and not as a separate performance obligation. Curation Foods’ standard payment terms with its customers generally range from 30 days to 90 days. Certain customers may receive cash-based incentives (including: volume rebates, discounts, and promotions), which are accounted for as variable consideration to Curation Foods’ performance obligations. Curation Foods estimates these sales incentives based on the expected amount to be provided to its customers and reduces revenues recognized towards its performance obligations. The Company has not historically had and does not anticipate significant changes in its estimates for variable consideration. |
Shipping and Handling Costs | Shipping and Handling Costs Amounts billed to third-party customers for shipping and handling are included as a component of revenues. Shipping and handling costs incurred are included as a component of cost of products sold and represent costs incurred to ship product from the processing facility or distribution center to the end consumer markets. |
Legal Contingencies | Legal Contingencies In the ordinary course of business, the Company is involved in various legal proceedings and claims. |
Organization, Basis of Presen_3
Organization, Basis of Presentation, and Summary of Significant Accounting Policies (Tables) | 9 Months Ended |
Feb. 26, 2023 | |
Accounting Policies [Abstract] | |
Schedule of Cash and Cash Equivalents | The following table provides a reconciliation of cash and cash equivalents and cash and cash equivalents, discontinued operations within the Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Consolidated Statements of Cash Flows: (In thousands) February 26, 2023 May 29, 2022 February 27, 2022 May 30, 2021 Cash and cash equivalents $ 2,950 $ 991 $ 1,854 $ 1,159 Cash and cash equivalents, discontinued operations — 652 — 136 Cash and cash equivalents $ 2,950 $ 1,643 $ 1,854 $ 1,295 |
Schedule of Inventories | Inventories are stated at the lower of cost (first-in, first-out method) or net realizable value and consist of the following: (In thousands) February 26, 2023 May 29, 2022 Finished goods $ 14,636 $ 13,418 Raw materials 22,554 21,329 Work in progress 11,506 9,553 Total $ 48,696 $ 44,300 |
Schedule of Financing Receivable, Allowance for Credit Loss | The changes in the Company’s allowance for credit losses are summarized in the following table (in thousands): Balance at Provision (benefit) for expected credit losses Write offs, Balance at Nine months ended February 26, 2023 $ 5 $ — $ (1) $ 4 Nine months ended February 27, 2022 $ 5 $ — $ — $ 5 |
Schedule of Accumulated Other Comprehensive Loss | The Company’s OCI consists of net deferred gains and losses on its interest rate swap derivative instruments. The components of AOCL, net of tax, are as follows: (In thousands) AOCL Balance as of May 29, 2022 $ (586) Amounts reclassified from OCI 586 Other comprehensive income, net $ 586 Balance as of February 26, 2023 $ — |
Schedule of Fair Value, Assets and Liabilities Measured on Recurring Basis | The following table summarizes the fair value of the Company’s assets and liabilities that are measured at fair value on a recurring and nonrecurring basis (in thousands): Fair Value at February 26, 2023 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 Property & equipment — — — — 3,500 — Customer relationship — — — — — 1,400 Tradenames — — — — — 4,000 Total assets — — — — 3,500 6,427 |
Schedule of Disaggregation of Revenue | The Company disaggregates its revenue by segment based on how it markets its products and services and reviews results of operations. The following tables disaggregate segment revenue by major product lines and services: (In thousands) Three Months Ended Nine Months Ended Lifecore: February 26, 2023 February 27, 2022 February 26, 2023 February 27, 2022 Contact development and manufacturing organization $ 17,809 $ 24,799 $ 52,088 $ 63,951 Fermentation 8,521 10,009 19,635 17,756 Total $ 26,330 $ 34,808 $ 71,723 $ 81,707 (In thousands) Three Months Ended Nine Months Ended Curation Foods: February 26, 2023 February 27, 2022 February 26, 2023 February 27, 2022 Olive Oil and vinegars $ 1,270 $ 2,169 $ 6,025 $ 7,016 Technology — 422 — 1,417 Total $ 1,270 $ 2,591 $ 6,025 $ 8,433 |
Stock-based Compensation and _2
Stock-based Compensation and Stockholders' Equity (Tables) | 9 Months Ended |
Feb. 26, 2023 | |
Share-Based Payment Arrangement [Abstract] | |
Schedule of Employee Service Share-based Compensation, Allocation of Recognized Period Costs | The following table summarizes stock-based compensation by income statement line item: Three Months Ended Nine months ended (In thousands) February 26, 2023 February 27, 2022 February 26, 2023 February 27, 2022 Continuing operations: Cost of product sales $ 109 $ 75 307 $ 177 Research and development 31 51 173 151 Selling, general and administrative 763 488 2,316 1,575 Discontinued Operations: Cost of product sales — 8 — 25 Total stock-based compensation $ 903 $ 622 $ 2,796 $ 1,928 |
Diluted Earnings Per Share (Tab
Diluted Earnings Per Share (Tables) | 9 Months Ended |
Feb. 26, 2023 | |
Earnings Per Share [Abstract] | |
Schedule of Computation of Diluted Net Income Per Share | The following table sets forth the computation of diluted earnings per share: Three Months Ended Nine Months Ended (In thousands, except per share amounts) February 26, 2023 February 27, 2022 February 26, 2023 February 27, 2022 Numerator: Net loss $ (40,192) $ (13,086) $ (63,992) $ (61,116) Denominator: Weighted average shares for basic net loss per share 30,304 29,482 29,838 29,459 Effect of dilutive securities: Convertible preferred stock — — — — Stock options and restricted stock units — — — — Weighted average shares for diluted net loss per share 30,304 29,482 29,838 29,459 Basic and Diluted net loss per share $ (1.33) $ (0.45) $ (2.14) $ (2.07) |
Debt (Tables)
Debt (Tables) | 9 Months Ended |
Feb. 26, 2023 | |
Debt Disclosure [Abstract] | |
Schedule of Long-term Debt Instruments | Long-term debt, net consists of the following: (In thousands) February 26, 2023 May 29, 2022 Term loan $ 107,079 $ 103,712 Total principal amount of long-term debt 107,079 103,712 Less: unamortized debt issuance costs (8,115) (5,534) Total long-term debt, net of unamortized debt issuance costs 98,964 98,178 Less: current portion of long-term debt, net — (98,178) Long-term debt, net $ 98,964 $ — |
Business Segment Reporting (Tab
Business Segment Reporting (Tables) | 9 Months Ended |
Feb. 26, 2023 | |
Segment Reporting [Abstract] | |
Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area | The Company’s international sales by geography are based on the billing address of the customer and were as follows, excluding discontinued operations: Three Months Ended Nine Months Ended (In millions) February 26, 2023 February 27, 2022 February 26, 2023 February 27, 2022 Switzerland $ 6.8 $ 8.2 $ 14.8 $ 13.6 Canada 0.7 0.2 1.9 1.4 Czech Republic 0.7 0.7 2.4 2.4 Ireland 1.1 0.5 2.9 1.3 Australia 1.1 — 1.1 — United Kingdom 0.6 0.9 1.4 2.2 All Other Countries 0.2 1.6 0.4 1.9 |
Schedule of Segment Reporting Information, by Segment | Operations by business segment consisted of the following: (In thousands) Lifecore Curation Foods Other Total Three Months Ended February 26, 2023 Net sales $ 26,330 $ 1,270 $ — $ 27,600 Gross profit 6,072 (94) — 5,978 Net (loss) income from continuing operations 851 280 (16,592) (15,461) Loss from discontinued operations, net of tax — (22,802) (1,929) (24,731) Depreciation and amortization 1,878 243 10 2,131 Interest income 16 — 6 22 Interest expense — — 5,818 5,818 Income tax (benefit) expense 268 (3,019) 2,821 70 Corporate overhead allocation 739 241 (980) — Nine Months Ended February 26, 2023 Net sales $ 71,723 $ 6,025 $ — $ 77,748 Gross profit 18,847 723 — 19,570 Net (loss) income from continuing operations 2,269 (1,974) (35,008) (34,713) Loss from discontinued operations, net of tax — (27,350) (1,929) (29,279) Depreciation and amortization 5,492 2,637 31 8,160 Dividend income — — — — Interest income 47 — 6 53 Interest expense — 1 13,714 13,715 Income tax (benefit) expense 717 (4,135) 3,496 78 Corporate overhead allocation 2,799 858 (3,657) — (In thousands) Lifecore Curation Foods Other Total Three Months Ended February 27, 2022 Net sales $ 34,808 $ 2,591 $ — $ 37,399 Gross profit 12,905 (39) — 12,866 Net (loss) income from continuing operations 5,054 (5,380) (6,312) (6,638) Loss from discontinued operations, net of tax — (3,407) (3,041) (6,448) Depreciation and amortization 1,674 304 18 1,996 Interest income 18 — 2 20 Interest expense — 26 4,079 4,105 Income tax (benefit) expense 1,596 (1,678) (5) (87) Corporate overhead allocation 1,175 289 (1,464) — Nine Months Ended February 27, 2022 Net sales $ 81,707 $ 8,433 $ — $ 90,140 Gross profit 30,384 1,249 — 31,633 Net (loss) income from continuing operations 11,317 4,640 (27,340) (11,383) Loss from discontinued operations, net of tax — (46,692) (3,041) (49,733) Depreciation and amortization 4,894 364 70 5,328 Interest income 57 — 9 66 Interest expense — 300 13,577 13,877 Income tax (benefit) expense 3,574 (13,422) 4,257 (5,591) Corporate overhead allocation 3,389 778 (4,167) — |
Restructuring Costs (Tables)
Restructuring Costs (Tables) | 9 Months Ended |
Feb. 26, 2023 | |
Restructuring and Related Activities [Abstract] | |
Schedule of Restructuring and Related Costs | The following table summarizes the restructuring costs recognized in the Company’s Consolidated Statements of Comprehensive (Loss) Income, by Business Segment, excluding discontinued operations. There were no restructuring costs recognized on the Lifecore segment. (in thousands) Curation Foods Other Total Three Months Ended February 26, 2023 Employee severance and benefit costs $ 683 $ 1,679 $ 2,362 Lease costs 43 — 43 Other restructuring costs 175 161 336 Total restructuring costs $ 901 $ 1,840 $ 2,741 (in thousands) Curation Foods Other Total Nine Months Ended February 26, 2023 Employee severance and benefit costs 927 1,679 2,606 Lease costs 88 — 88 Other restructuring costs 494 1,423 1,917 Total restructuring costs $ 1,509 $ 3,102 $ 4,611 The following table summarizes the restructuring costs recognized in the Company’s Consolidated Statements of (Loss) Income, by Business Segment, since inception of the restructuring plan in fiscal year 2020 through the nine months ended February 26, 2023, excluding discontinued operations: Curation Foods Other Total (in thousands) Asset write-off costs, net $ 7,552 $ 418 $ 7,970 Employee severance and benefit costs 1,486 2,463 3,949 Lease costs 2,306 26 2,332 Other restructuring costs 817 6,321 7,138 Total restructuring costs $ 12,161 $ 9,228 $ 21,389 |
Discontinued Operations (Tables
Discontinued Operations (Tables) | 9 Months Ended |
Feb. 26, 2023 | |
Discontinued Operations and Disposal Groups [Abstract] | |
Disposal Groups, Including Discontinued Operations | The assets and liabilities of Yucatan as of May 29, 2022 were as follows (in thousands): May 29, 2022 ASSETS Cash and cash equivalents $ 652 Accounts receivable, less allowance for credit losses 8,078 Inventories 22,545 Prepaid expenses and other current assets 1,869 Total current assets, discontinued operations 33,144 Property and equipment, net 3,500 Operating lease right-of-use assets 2,061 Trademarks/tradenames, net 4,000 Customer relationships, net 1,400 Other assets 102 Total other non-current assets, discontinued operations 11,063 Total assets, discontinued operations $ 44,207 LIABILITIES Accounts payable $ 2,814 Accrued compensation 297 Other accrued liabilities 800 Current portion of lease liabilities 434 Total current liabilities, discontinued operations 4,345 Long-term lease liabilities 1,627 Non-current liabilities, discontinued operations 1,627 Total liabilities, discontinued operations $ 5,972 The key components of income from discontinued operations for the three and nine months ended February 26, 2023 and February 27, 2022 were as follows (in thousands): Three Months Ended Nine Months Ended February 26, 2023 February 27, 2022 February 26, 2023 February 27, 2022 Product sales $ 10,811 $ 29,234 $ 42,820 $ 234,773 Cost of product sales 12,571 29,041 44,812 222,948 Gross profit (1,760) 193 (1,992) 11,825 Operating costs and expenses: Research and development — 159 2 1,981 Selling, general and administrative 1,902 3,245 5,216 19,804 Impairment of intangible asset and goodwill — — 1,000 32,057 Loss on sale of Eat Smart — 235 — 235 Loss on Sale of Yucatan 21,039 21,039 Restructuring costs 30 3,209 30 4,642 Total operating costs and expenses 22,971 6,848 27,287 58,719 Operating loss (24,731) (6,655) (29,279) (46,894) Interest expense — (204) — (2,682) Loss from discontinued operations before taxes (24,731) (6,859) (29,279) (49,576) Income tax benefit (expense) — 411 — (157) Loss from discontinued operations, net of tax $ (24,731) $ (6,448) $ (29,279) $ (49,733) |
Organization, Basis of Presen_4
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Narrative (Details) | 3 Months Ended | 9 Months Ended | 12 Months Ended | ||||||||||
Feb. 07, 2023 USD ($) | Nov. 25, 2022 USD ($) $ / shares shares | Jun. 09, 2021 USD ($) | Nov. 03, 2020 USD ($) | Sep. 02, 2020 USD ($) claimant | Feb. 26, 2023 USD ($) product | Aug. 28, 2022 USD ($) | Feb. 27, 2022 USD ($) | Feb. 28, 2021 USD ($) | Feb. 26, 2023 USD ($) product | Feb. 27, 2022 USD ($) | May 30, 2021 USD ($) | May 29, 2022 USD ($) | |
Accounting Policies [Line Items] | |||||||||||||
Number of product category | product | 2 | 2 | |||||||||||
Eat Smart sale net working capital adjustments | $ 0 | $ 2,390,000 | |||||||||||
Cash and cash equivalents | $ 2,950,000 | $ 1,854,000 | 2,950,000 | 1,854,000 | $ 1,159,000 | $ 991,000 | |||||||
Debt issuance cost, current portion | 8,100,000 | 8,100,000 | |||||||||||
Debt issuance cost, noncurrent portion | 5,500,000 | ||||||||||||
Proceeds from sales of property and equipment | 0 | 1,096,000 | |||||||||||
Inventories | 48,696,000 | 48,696,000 | 44,300,000 | ||||||||||
Property and equipment, net | 120,799,000 | 120,799,000 | 115,031,000 | ||||||||||
Gain on sale | 0 | $ 0 | 2,108,000 | 0 | |||||||||
Deferred revenue | 2,711,000 | 2,711,000 | 919,000 | ||||||||||
Revenue recognized included in the contract liability | 500,000 | 100,000 | |||||||||||
Insurance recoveries | $ 1,600,000 | ||||||||||||
Private Placement | |||||||||||||
Accounting Policies [Line Items] | |||||||||||||
Number of shares issued in transaction (in shares) | shares | 627,746 | ||||||||||||
Consideration received on transaction | $ 5,000,000 | ||||||||||||
Price per share sold (usd per share) | $ / shares | $ 7.97 | ||||||||||||
Compliance Matters | |||||||||||||
Accounting Policies [Line Items] | |||||||||||||
Number of claimants | claimant | 1 | ||||||||||||
Damages sought | $ 10,000,000 | ||||||||||||
Recoverable amount | 0 | 0 | |||||||||||
Compliance Matters | Minimum | |||||||||||||
Accounting Policies [Line Items] | |||||||||||||
Damages sought | $ 80,000,000 | ||||||||||||
BreatheWay | |||||||||||||
Accounting Policies [Line Items] | |||||||||||||
Proceeds from the sale of BreatheWay, net | $ 3,100,000 | ||||||||||||
Gain on sale | $ 2,100,000 | ||||||||||||
Yucatan | |||||||||||||
Accounting Policies [Line Items] | |||||||||||||
Loss on disposition of business | 21,039,000 | 0 | |||||||||||
Proceeds from the sale of BreatheWay, net | 12,531,000 | $ 0 | |||||||||||
Yucatan | Discontinued Operations, Disposed of by Sale | |||||||||||||
Accounting Policies [Line Items] | |||||||||||||
Consideration for disposition | $ 17,500,000 | ||||||||||||
Eat Smart sale net working capital adjustments | $ 5,000,000 | ||||||||||||
Curation Foods’ Avocado Business | Discontinued Operations, Disposed of by Sale | |||||||||||||
Accounting Policies [Line Items] | |||||||||||||
Loss on disposition of business | 21,000,000 | ||||||||||||
Unbilled Revenues | |||||||||||||
Accounting Policies [Line Items] | |||||||||||||
Contract with customer, assets | 4,700,000 | 4,700,000 | 10,200,000 | ||||||||||
Deferred revenue | 2,700,000 | $ 2,700,000 | 900,000 | ||||||||||
Property, Plant and Equipment | Yucatan | |||||||||||||
Accounting Policies [Line Items] | |||||||||||||
Asset impairment charges | 1,000,000 | ||||||||||||
Customer Relationships | |||||||||||||
Accounting Policies [Line Items] | |||||||||||||
Useful life (in years) | 12 years | ||||||||||||
Customer Relationships | O Olive & Vinegar | |||||||||||||
Accounting Policies [Line Items] | |||||||||||||
Asset impairment charges | 300,000 | ||||||||||||
Rock Hill South Carolina Distribution Facility | |||||||||||||
Accounting Policies [Line Items] | |||||||||||||
Impairment of assets held for sale | $ 0 | ||||||||||||
Proceeds from sales of property and equipment | $ 1,100,000 | ||||||||||||
Gain on sale of property | $ 600,000 | ||||||||||||
Prepaid Expenses and Other Current Assets | |||||||||||||
Accounting Policies [Line Items] | |||||||||||||
Debt issuance costs | 700,000 | $ 700,000 | 700,000 | ||||||||||
Prepaid Expenses and Other Current Assets | BreatheWay | |||||||||||||
Accounting Policies [Line Items] | |||||||||||||
Assets held for sale | 1,000,000 | ||||||||||||
Inventories | 900,000 | ||||||||||||
Property and equipment, net | 100,000 | ||||||||||||
Other Assets | |||||||||||||
Accounting Policies [Line Items] | |||||||||||||
Debt issuance costs | $ 1,300,000 | $ 1,300,000 | $ 1,900,000 |
Organization, Basis of Presen_5
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Reconciliation of Cash, Cash Equivalents (Details) - USD ($) $ in Thousands | Feb. 26, 2023 | May 29, 2022 | Feb. 27, 2022 | May 30, 2021 |
Accounting Policies [Abstract] | ||||
Cash and cash equivalents | $ 2,950 | $ 991 | $ 1,854 | $ 1,159 |
Cash and cash equivalents, discontinued operations | 0 | 652 | 0 | 136 |
Cash and cash equivalents | $ 2,950 | $ 1,643 | $ 1,854 | $ 1,295 |
Organization, Basis of Presen_6
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Components of Inventories (Details) - USD ($) $ in Thousands | Feb. 26, 2023 | May 29, 2022 |
Accounting Policies [Abstract] | ||
Finished goods | $ 14,636 | $ 13,418 |
Raw materials | 22,554 | 21,329 |
Work in progress | 11,506 | 9,553 |
Total | $ 48,696 | $ 44,300 |
Organization, Basis of Presen_7
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Allowance for Credit Loss Rollforward (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Feb. 26, 2023 | Feb. 27, 2022 | |
Financing Receivable, Allowance for Credit Loss [Roll Forward] | ||
Balance at beginning of period | $ 5 | $ 5 |
Provision (benefit) for expected credit losses | 0 | 0 |
Write offs, net of recoveries | (1) | 0 |
Balance at end of period | $ 4 | $ 5 |
Organization, Basis of Presen_8
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Components of Other Comprehensive Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Feb. 26, 2023 | Nov. 27, 2022 | Aug. 28, 2022 | Feb. 27, 2022 | Nov. 28, 2021 | Aug. 29, 2021 | Feb. 26, 2023 | Feb. 27, 2022 | |
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||||||
Beginning balance | $ 74,167 | $ 80,364 | $ 90,697 | $ 156,090 | $ 193,833 | $ 202,784 | $ 90,697 | $ 202,784 |
Other comprehensive income, net of tax | 0 | 286 | 300 | 104 | 176 | 366 | 586 | 646 |
Ending balance | 34,207 | $ 74,167 | 80,364 | $ 143,724 | $ 156,090 | $ 193,833 | 34,207 | $ 143,724 |
AOCL | ||||||||
AOCI Including Portion Attributable to Noncontrolling Interest, Net of Tax [Roll Forward] | ||||||||
Beginning balance | $ (586) | (586) | ||||||
Amounts reclassified from OCI | 586 | |||||||
Other comprehensive income, net of tax | 586 | |||||||
Ending balance | $ 0 | $ 0 |
Organization, Basis of Presen_9
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Fair Value of Assets and Liabilities (Details) - USD ($) $ in Thousands | Feb. 26, 2023 | May 29, 2022 |
Level 1 | ||
Assets: | ||
Assets held for sale - nonrecurring | $ 0 | $ 0 |
Total assets | 0 | 0 |
Level 1 | Fair Value, Measurements, Recurring | ||
Assets: | ||
Property & equipment | 0 | 0 |
Customer relationship | 0 | 0 |
Tradenames | 0 | 0 |
Level 2 | ||
Assets: | ||
Assets held for sale - nonrecurring | 0 | 0 |
Total assets | 0 | 3,500 |
Level 2 | Fair Value, Measurements, Recurring | ||
Assets: | ||
Property & equipment | 0 | 3,500 |
Customer relationship | 0 | 0 |
Tradenames | 0 | 0 |
Level 3 | ||
Assets: | ||
Assets held for sale - nonrecurring | 0 | 1,027 |
Total assets | 0 | 6,427 |
Level 3 | Fair Value, Measurements, Recurring | ||
Assets: | ||
Property & equipment | 0 | 0 |
Customer relationship | 0 | 1,400 |
Tradenames | $ 0 | $ 4,000 |
Organization, Basis of Prese_10
Organization, Basis of Presentation, and Summary of Significant Accounting Policies - Disaggregation of Revenue (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 26, 2023 | Feb. 27, 2022 | Feb. 26, 2023 | Feb. 27, 2022 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 27,600 | $ 37,399 | $ 77,748 | $ 90,140 |
Lifecore | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 26,330 | 34,808 | 71,723 | 81,707 |
Lifecore | Contact development and manufacturing organization | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 17,809 | 24,799 | 52,088 | 63,951 |
Lifecore | Fermentation | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 8,521 | 10,009 | 19,635 | 17,756 |
Curation Foods | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 1,270 | 2,591 | 6,025 | 8,433 |
Curation Foods | Olive Oil and vinegars | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 1,270 | 2,169 | 6,025 | 7,016 |
Curation Foods | Technology | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | $ 0 | $ 422 | $ 0 | $ 1,417 |
Convertible Preferred Stock (De
Convertible Preferred Stock (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Jan. 09, 2023 | Feb. 26, 2023 | Feb. 26, 2023 | Feb. 27, 2022 | Nov. 27, 2022 | |
Class of Stock [Line Items] | |||||
Proceeds of Convertible Preferred Stock, net of issuance costs (in shares) | 39,000 | ||||
Proceeds of Convertible Preferred Stock, net of issuance costs | $ 38,082 | ||||
Registration Rights Agreement penalty | 800 | $ 800 | |||
Proceeds from sale of preferred stock, net of issuance costs | 38,082 | $ 0 | |||
Convertible Preferred Stock PIK dividend | (428) | (428) | $ 0 | ||
Convertible preferred stock | $ 38,510 | $ 38,510 | $ 0 | ||
Temporary Equity, Shares Outstanding | 39,000 | 39,000 | 0 | ||
Additional Paid-in Capital | |||||
Class of Stock [Line Items] | |||||
Convertible Preferred Stock PIK dividend | $ (428) | ||||
Series A Preferred Stock | |||||
Class of Stock [Line Items] | |||||
Proceeds of Convertible Preferred Stock, net of issuance costs (in shares) | 38,750 | ||||
Temporary equity par value (usd per share) | $ 0.001 | ||||
Dividend percentage rate | 7.50% | ||||
Contingent Interest | 1% | ||||
Liquidation preference | $ 39,200 | ||||
Liquidation preference per share (usd per share) | $ 7 | ||||
Exchange limit | 19.99% | ||||
Conversion limit | 9.99% | ||||
Mandatory Conversion Right minimum | 150% | ||||
Proceeds of Convertible Preferred Stock, net of issuance costs | 38,100 | ||||
Proceeds from sale of preferred stock, net of issuance costs | 38,800 | ||||
Payments of stock issuance costs | 700 | ||||
Convertible Preferred Stock PIK dividend | (400) | ||||
Convertible preferred stock | $ 38,500 | $ 38,500 | |||
Temporary Equity, Shares Outstanding | 39,200 | 39,200 | |||
Series A Preferred Stock | Additional Paid-in Capital | |||||
Class of Stock [Line Items] | |||||
Convertible Preferred Stock PIK dividend | $ 400 |
Stock-based Compensation and _3
Stock-based Compensation and Stockholders' Equity - Narrative (Details) - USD ($) $ in Millions | 3 Months Ended | 9 Months Ended | ||
Feb. 26, 2023 | Feb. 26, 2023 | Feb. 27, 2022 | Jul. 14, 2010 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Granted options (in shares) | 0 | 743,050 | ||
Shares for future issuance (in shares) | 3,400,000 | 3,400,000 | ||
Repurchase plan authorized amount (up to) | $ 3.8 | $ 3.8 | $ 10 | |
Stock repurchased during period (in shares) | 0 | 0 | ||
RSUs | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Awarded (in shares) | 77,098 | 336,186 | ||
Weighted-average period (in years) | 1 year 11 months 12 days | |||
Employee Stock Option | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Unrecognized compensation expense | $ 5 | $ 5 | ||
Weighted-average period (in years) | 2 years 1 month 20 days |
Stock-based Compensation and _4
Stock-based Compensation and Stockholders' Equity - Summary of Stock-based Compensation by Income Statement Line Item (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 26, 2023 | Feb. 27, 2022 | Feb. 26, 2023 | Feb. 27, 2022 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | $ 903 | $ 622 | $ 2,796 | $ 1,928 |
Cost of product sales | Continuing operations: | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 109 | 75 | 307 | 177 |
Cost of product sales | Discontinued Operations: | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 0 | 8 | 0 | 25 |
Research and development | Continuing operations: | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | 31 | 51 | 173 | 151 |
Selling, general and administrative | Continuing operations: | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Total stock-based compensation | $ 763 | $ 488 | $ 2,316 | $ 1,575 |
Diluted Earnings Per Share - Di
Diluted Earnings Per Share - Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | 9 Months Ended | ||||||
Feb. 26, 2023 | Nov. 27, 2022 | Aug. 28, 2022 | Feb. 27, 2022 | Nov. 28, 2021 | Aug. 29, 2021 | Feb. 26, 2023 | Feb. 27, 2022 | |
Numerator: | ||||||||
Net loss | $ (40,192) | $ (12,449) | $ (11,351) | $ (13,086) | $ (38,521) | $ (9,509) | $ (63,992) | $ (61,116) |
Denominator: | ||||||||
Weighted average shares for basic net loss per share (in shares) | 30,304 | 29,482 | 29,838 | 29,459 | ||||
Effect of dilutive securities: | ||||||||
Convertible preferred stock (in shares) | 0 | 0 | 0 | 0 | ||||
Stock options and restricted stock units (in shares) | 0 | 0 | 0 | 0 | ||||
Weighted average shares for diluted net loss per share (in shares) | 30,304 | 29,482 | 29,838 | 29,459 | ||||
Diluted net loss per share (in dollars per share) | $ (1.33) | $ (0.45) | $ (2.14) | $ (2.07) |
Income Taxes (Details)
Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 26, 2023 | Feb. 27, 2022 | Feb. 26, 2023 | Feb. 27, 2022 | |
Income Tax Disclosure [Abstract] | ||||
Income tax (expense) benefit | $ (70) | $ 87 | $ (78) | $ 5,591 |
Effective tax rate | 0.20% | 32% | ||
Unrecognized tax benefits | 1,000 | $ 1,000 | ||
Unrecognized tax benefits that would result in an adjustment to effective tax rate | $ 900 | $ 900 |
Debt - Schedule of Long-term De
Debt - Schedule of Long-term Debt (Details) - USD ($) $ in Thousands | Feb. 26, 2023 | May 29, 2022 |
Debt Disclosure [Abstract] | ||
Long-term debt | $ 107,079 | $ 103,712 |
Less: unamortized debt issuance costs | (8,115) | (5,534) |
Total long-term debt, net of unamortized debt issuance costs | 98,964 | 98,178 |
Less: current portion of long-term debt, net | 0 | (98,178) |
Long-term debt, net | $ 98,964 | $ 0 |
Debt - Narrative (Details)
Debt - Narrative (Details) - USD ($) | Dec. 31, 2020 | Feb. 26, 2023 | Jan. 09, 2023 | May 29, 2022 | Apr. 30, 2022 | Dec. 02, 2019 | Jun. 25, 2018 | Nov. 01, 2016 |
Debt Instrument [Line Items] | ||||||||
Debt issuance costs | $ 8,115,000 | $ 5,534,000 | ||||||
Line of credit | 16,000,000 | $ 0 | ||||||
BMO | Interest Rate Swap | ||||||||
Debt Instrument [Line Items] | ||||||||
Interest rate swap contract notional amount | $ 110,000,000 | $ 30,000,000 | $ 50,000,000 | |||||
LIBOR | BMO | Interest Rate Swap | ||||||||
Debt Instrument [Line Items] | ||||||||
Derivative interest rate | 1.53% | 2.74% | 1.22% | |||||
Prior Term Loan Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt instrument, face amount | $ 170,000,000 | |||||||
Refinanced Revolver | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt issuance costs | $ 62,500 | |||||||
Percent of prepayment penalty | 3% | |||||||
Refinanced Revolver | Base Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 7.50% | |||||||
Refinanced Revolver | SOFR | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 8.50% | |||||||
Term Loan | ||||||||
Debt Instrument [Line Items] | ||||||||
Percent of prepayment penalty | 3% | |||||||
Term Loan | LIBOR | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 2% | |||||||
Credit Agreements | ||||||||
Debt Instrument [Line Items] | ||||||||
Debt issuance costs | $ 1,100,000 | |||||||
Revolving Credit Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit | 16,000,000 | |||||||
Revolving Credit Facility | Prior Term Loan Facility | ||||||||
Debt Instrument [Line Items] | ||||||||
Line of credit | $ 107,000,000 | |||||||
Effective rate | 13.20% | |||||||
Revolving Credit Facility | Refinanced Revolver | ||||||||
Debt Instrument [Line Items] | ||||||||
Revolving line of credit | $ 75,000,000 | $ 60,000,000 | $ 20,000,000 | |||||
Debt issuance costs | $ 700,000 | |||||||
Commitment fee percentage | 0.375% | |||||||
Revolver interest rate | 2% | |||||||
Line of credit | $ 16,000,000 | |||||||
Effective rate | 7.20% | |||||||
Revolving Credit Facility | Refinanced Revolver | Upon Sale of Yucatan | ||||||||
Debt Instrument [Line Items] | ||||||||
Revolving line of credit | $ 50,000,000 | |||||||
Revolving Credit Facility | Refinanced Revolver | Minimum | LIBOR | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 2% | |||||||
Revolving Credit Facility | Refinanced Revolver | Minimum | Base Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 1% | |||||||
Revolving Credit Facility | Refinanced Revolver | Maximum | LIBOR | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 2.50% | |||||||
Revolving Credit Facility | Refinanced Revolver | Maximum | Base Rate | ||||||||
Debt Instrument [Line Items] | ||||||||
Basis spread on variable rate | 1.50% |
Business Segment Reporting - Na
Business Segment Reporting - Narrative (Details) | 9 Months Ended | |
Feb. 26, 2023 brand segment | Feb. 27, 2022 | |
Revenue, Major Customer [Line Items] | ||
Number of operating segments | segment | 3 | |
Number of natural food brands | brand | 3 | |
Sales Revenue, Net | Customer Concentration Risk | Customer One | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk percentage | 37% | 17% |
Sales Revenue, Net | Customer Concentration Risk | Customer Two | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk percentage | 15% | 13% |
Accounts Receivable | Customer Concentration Risk | Customer One | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk percentage | 47% | 25% |
Accounts Receivable | Customer Concentration Risk | Customer Two | ||
Revenue, Major Customer [Line Items] | ||
Concentration risk percentage | 10% | 19% |
Business Segment Reporting - Sa
Business Segment Reporting - Sales by Geographic Area (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 26, 2023 | Feb. 27, 2022 | Feb. 26, 2023 | Feb. 27, 2022 | |
Segment Reporting Information [Line Items] | ||||
Product sales | $ 27,600 | $ 37,399 | $ 77,748 | $ 90,140 |
Switzerland | ||||
Segment Reporting Information [Line Items] | ||||
Product sales | 6,800 | 8,200 | 14,800 | 13,600 |
Canada | ||||
Segment Reporting Information [Line Items] | ||||
Product sales | 700 | 200 | 1,900 | 1,400 |
Czech Republic | ||||
Segment Reporting Information [Line Items] | ||||
Product sales | 700 | 700 | 2,400 | 2,400 |
Ireland | ||||
Segment Reporting Information [Line Items] | ||||
Product sales | 1,100 | 500 | 2,900 | 1,300 |
Australia | ||||
Segment Reporting Information [Line Items] | ||||
Product sales | 1,100 | 0 | 1,100 | 0 |
United Kingdom | ||||
Segment Reporting Information [Line Items] | ||||
Product sales | 600 | 900 | 1,400 | 2,200 |
All Other Countries | ||||
Segment Reporting Information [Line Items] | ||||
Product sales | $ 200 | $ 1,600 | $ 400 | $ 1,900 |
Business Segment Reporting - Op
Business Segment Reporting - Operations by Business Segment (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 26, 2023 | Feb. 27, 2022 | Feb. 26, 2023 | Feb. 27, 2022 | |
Segment Reporting Information [Line Items] | ||||
Net sales | $ 27,600 | $ 37,399 | $ 77,748 | $ 90,140 |
Gross profit | 5,978 | 12,866 | 19,570 | 31,633 |
Net (loss) income from continuing operations | (15,461) | (6,638) | (34,713) | (11,383) |
Loss from discontinued operations, net of tax | (24,731) | (6,448) | (29,279) | (49,733) |
Depreciation and amortization | 2,131 | 1,996 | 8,160 | 5,328 |
Interest income | 22 | 20 | 53 | 66 |
Interest expense | 5,818 | 4,105 | 13,715 | 13,877 |
Income tax (benefit) expense | 70 | (87) | 78 | (5,591) |
Corporate overhead allocation | 0 | 0 | 0 | 0 |
Dividend income | 0 | |||
Lifecore | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 26,330 | 34,808 | 71,723 | 81,707 |
Gross profit | 6,072 | 12,905 | 18,847 | 30,384 |
Net (loss) income from continuing operations | 851 | 5,054 | 2,269 | 11,317 |
Loss from discontinued operations, net of tax | 0 | 0 | 0 | 0 |
Depreciation and amortization | 1,878 | 1,674 | 5,492 | 4,894 |
Interest income | 16 | 18 | 47 | 57 |
Interest expense | 0 | 0 | 0 | 0 |
Income tax (benefit) expense | 268 | 1,596 | 717 | 3,574 |
Corporate overhead allocation | 739 | 1,175 | 2,799 | 3,389 |
Dividend income | 0 | |||
Curation Foods | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 1,270 | 2,591 | 6,025 | 8,433 |
Gross profit | (94) | (39) | 723 | 1,249 |
Net (loss) income from continuing operations | 280 | (5,380) | (1,974) | 4,640 |
Loss from discontinued operations, net of tax | (22,802) | (3,407) | (27,350) | (46,692) |
Depreciation and amortization | 243 | 304 | 2,637 | 364 |
Interest income | 0 | 0 | 0 | 0 |
Interest expense | 0 | 26 | 1 | 300 |
Income tax (benefit) expense | (3,019) | (1,678) | (4,135) | (13,422) |
Corporate overhead allocation | 241 | 289 | 858 | 778 |
Dividend income | 0 | |||
Other | ||||
Segment Reporting Information [Line Items] | ||||
Net sales | 0 | 0 | 0 | 0 |
Gross profit | 0 | 0 | 0 | 0 |
Net (loss) income from continuing operations | (16,592) | (6,312) | (35,008) | (27,340) |
Loss from discontinued operations, net of tax | (1,929) | (3,041) | (1,929) | (3,041) |
Depreciation and amortization | 10 | 18 | 31 | 70 |
Interest income | 6 | 2 | 6 | 9 |
Interest expense | 5,818 | 4,079 | 13,714 | 13,577 |
Income tax (benefit) expense | 2,821 | (5) | 3,496 | 4,257 |
Corporate overhead allocation | $ (980) | $ (1,464) | (3,657) | $ (4,167) |
Dividend income | $ 0 |
Restructuring Costs - Schedule
Restructuring Costs - Schedule of Restructuring Related Activities (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | 45 Months Ended |
Feb. 26, 2023 | Feb. 26, 2023 | Feb. 26, 2023 | |
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | $ 2,741 | $ 4,611 | $ 21,389 |
Asset write-off costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 7,970 | ||
Employee severance and benefit costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 2,362 | 2,606 | 3,949 |
Lease costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 43 | 88 | 2,332 |
Other restructuring costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 336 | 1,917 | 7,138 |
Curation Foods | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 901 | 1,509 | 12,161 |
Curation Foods | Asset write-off costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 7,552 | ||
Curation Foods | Employee severance and benefit costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 683 | 927 | 1,486 |
Curation Foods | Lease costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 43 | 88 | 2,306 |
Curation Foods | Other restructuring costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 175 | 494 | 817 |
Other | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 1,840 | 3,102 | 9,228 |
Other | Asset write-off costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 418 | ||
Other | Employee severance and benefit costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 1,679 | 1,679 | 2,463 |
Other | Lease costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | 0 | 0 | 26 |
Other | Other restructuring costs | |||
Restructuring Cost and Reserve [Line Items] | |||
Restructuring costs | $ 161 | $ 1,423 | $ 6,321 |
Restructuring Costs - Narrative
Restructuring Costs - Narrative (Details) $ in Millions | Feb. 26, 2023 USD ($) |
Restructuring and Related Activities [Abstract] | |
Expected restructuring costs | $ 23 |
Discontinued Operations - Narra
Discontinued Operations - Narrative (Details) - Discontinued Operations: - USD ($) | 3 Months Ended | 9 Months Ended | |||
Feb. 26, 2023 | Feb. 27, 2022 | Feb. 26, 2023 | Feb. 27, 2022 | May 29, 2022 | |
Yucatan | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Assets | $ 0 | $ 0 | $ 44,207,000 | ||
Liabilities | 0 | 0 | $ 5,972,000 | ||
Cash (used) provided by operating activities | 100,000 | $ 2,900,000 | |||
Cash used in investing activities | 0 | 2,500,000 | |||
Depreciation and amortization expense | $ 100,000 | $ 800,000 | 500,000 | 2,800,000 | |
Capital expenditures | 0 | 2,500,000 | |||
Eat Smart | |||||
Income Statement, Balance Sheet and Additional Disclosures by Disposal Groups, Including Discontinued Operations [Line Items] | |||||
Cash (used) provided by operating activities | 0 | (5,500,000) | |||
Cash used in investing activities | 0 | 117,800,000 | |||
Depreciation and amortization expense | $ 300,000 | 5,100,000 | |||
Capital expenditures | $ 0 | $ 1,900,000 |
Discontinued Operations - Asset
Discontinued Operations - Assets and Liabilities (Details) - USD ($) | Feb. 26, 2023 | May 29, 2022 |
ASSETS | ||
Total current assets, discontinued operations | $ 0 | $ 33,144,000 |
Other assets | 0 | 11,063,000 |
LIABILITIES | ||
Total current liabilities, discontinued operations | 0 | 4,345,000 |
Non-current liabilities, discontinued operations | 0 | 1,627,000 |
Discontinued Operations: | Yucatan | ||
ASSETS | ||
Cash and cash equivalents | 652,000 | |
Accounts receivable, less allowance for credit losses | 8,078,000 | |
Inventories | 22,545,000 | |
Prepaid expenses and other current assets | 1,869,000 | |
Total current assets, discontinued operations | 33,144,000 | |
Property and equipment, net | 3,500,000 | |
Operating lease right-of-use assets | 2,061,000 | |
Other assets | 102,000 | |
Total other assets, discontinued operations | 11,063,000 | |
Total assets, discontinued operations | 0 | 44,207,000 |
LIABILITIES | ||
Accounts payable | 2,814,000 | |
Accrued compensation | 297,000 | |
Current liabilities, discontinued operations | 800,000 | |
Current portion of lease liabilities | 434,000 | |
Total current liabilities, discontinued operations | 4,345,000 | |
Long-term lease liabilities | 1,627,000 | |
Non-current liabilities, discontinued operations | 1,627,000 | |
Total liabilities, discontinued operations | $ 0 | 5,972,000 |
Discontinued Operations: | Yucatan | Trademarks/tradenames | ||
ASSETS | ||
Intangible assets, non-current | 4,000,000 | |
Discontinued Operations: | Yucatan | Customer Relationships | ||
ASSETS | ||
Intangible assets, non-current | $ 1,400,000 |
Discontinued Operations - Incom
Discontinued Operations - Income (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Feb. 26, 2023 | Feb. 27, 2022 | Feb. 26, 2023 | Feb. 27, 2022 | |
Operating costs and expenses: | ||||
Loss from discontinued operations before taxes | $ (24,731) | $ (6,859) | $ (29,279) | $ (49,576) |
Income tax (expense) benefit | 0 | 411 | 0 | (157) |
Discontinued Operations | Yucatan And Eat Smart | ||||
Disposal Group, Including Discontinued Operation, Income Statement | ||||
Product sales | 10,811 | 29,234 | 42,820 | 234,773 |
Cost of product sales | 12,571 | 29,041 | 44,812 | 222,948 |
Gross profit | (1,760) | 193 | (1,992) | 11,825 |
Operating costs and expenses: | ||||
Research and development | 0 | 159 | 2 | 1,981 |
Selling, general and administrative | 1,902 | 3,245 | 5,216 | 19,804 |
Impairment of intangible asset and goodwill | 0 | 0 | 1,000 | 32,057 |
Restructuring costs | 30 | 3,209 | 30 | 4,642 |
Total operating costs and expenses | 22,971 | 6,848 | 27,287 | 58,719 |
Operating loss | (24,731) | (6,655) | (29,279) | (46,894) |
Interest expense | 0 | (204) | 0 | (2,682) |
Loss from discontinued operations before taxes | (24,731) | (6,859) | (29,279) | (49,576) |
Income tax (expense) benefit | 0 | 411 | 0 | (157) |
Loss from discontinued operations, net of tax | (24,731) | (6,448) | (29,279) | (49,733) |
Discontinued Operations | Yucatan | ||||
Operating costs and expenses: | ||||
Loss on sale of Eat Smart | 21,039 | 21,039 | ||
Discontinued Operations | Eat Smart | ||||
Operating costs and expenses: | ||||
Loss on sale of Eat Smart | $ 0 | $ 235 | $ 0 | $ 235 |
Subsequent Events (Details)
Subsequent Events (Details) | May 22, 2023 USD ($) | May 03, 2023 | Apr. 06, 2023 USD ($) | Feb. 26, 2023 USD ($) | May 29, 2022 USD ($) |
Subsequent Event [Line Items] | |||||
Line of credit | $ 16,000,000 | $ 0 | |||
Revolving Credit Facility | |||||
Subsequent Event [Line Items] | |||||
Line of credit | $ 16,000,000 | ||||
Subsequent Event | |||||
Subsequent Event [Line Items] | |||||
Supply agreement, automatic term extension | 2 years | ||||
Subsequent Event | Equipment Sale and Leaseback Agreements | |||||
Subsequent Event [Line Items] | |||||
Sale leaseback transaction, net book value | $ 10,000,000 | ||||
Option to repurchase, term | 7 years | ||||
Price at end of term | $ 1 | ||||
Quarterly rental payment to be received | 0.025 | ||||
Rental payment, purchase price less cumulative paydown payments made | 1.50% | ||||
Subsequent Event | Revolving Credit Facility | |||||
Subsequent Event [Line Items] | |||||
Revolving line of credit | $ 40,000,000 | ||||
Subsequent Event | Term Loan Credit Agreement | |||||
Subsequent Event [Line Items] | |||||
Revolving line of credit | $ 140,000,000 | ||||
Debt instrument, interest rate, stated percentage | 10% | ||||
Paid-in-cash interest | 3% | ||||
Minimum liquidity covenant | $ 4,000,000 | ||||
Write off of deferred debt issuance costs | 7,500,000 | ||||
Prepayment cost | 12,900,000 | ||||
Subsequent Event | Term Loan Credit Agreement | Revolving Credit Facility | |||||
Subsequent Event [Line Items] | |||||
Write off of deferred debt issuance costs | 600,000 | ||||
Line of credit reduction | $ 4,000,000 | ||||
Coverage ratio | 1 | ||||
Debt covenant, availability of line of credit | 10% | ||||
Debt covenant, availability of line of credit, amount | $ 4,000,000 | ||||
Fee amount | 1,200,000 | ||||
Subsequent Event | Term Loan Credit Agreement | Revolving Credit Facility | At Entry into the Revolving Loan Amendment | |||||
Subsequent Event [Line Items] | |||||
Fee amount | 800,000 | ||||
Subsequent Event | Term Loan Credit Agreement | Revolving Credit Facility | Upon Full Repayment Or Change Of Control | |||||
Subsequent Event [Line Items] | |||||
Fee amount | $ 400,000 | ||||
Subsequent Event | O Olive Oil and Vinegar Business | |||||
Subsequent Event [Line Items] | |||||
Post-closing adjustments | $ 3,100,000 | ||||
Note receivable | $ 3,100,000 | ||||
Note receivable, stated rate | 12% | ||||
Subsequent Event | O Olive Oil and Vinegar Business | Discontinued Operations, Disposed of by Sale | |||||
Subsequent Event [Line Items] | |||||
Consideration for disposition | $ 6,200,000 |