Lifecore Biomedical Inc., a Chaska maker of sterile injectable pharmaceutical products, is exploring strategic alternatives after warning of "substantial doubt about the company's ability to continue as a going concern."
Options include the sale of the company and further debt or equity financing, the company said in a late Thursday announcement.
The company lost more than two-thirds of its market value on Friday. Its stock plummeted 67.3% for the day in response to the company's announcement.
The company faces declining revenue. In a statement, Lifecore CEO James Hall said Lifecore is saddled with "near-term challenges ... with its current capital structure."
Five months ago, its California-based owner Landec Corp. renamed itself and relocated to Minnesota, where the company has a long history.
Lifecore said that it would start the strategic review process after trying to obtain forbearance agreements — temporary postponement of loan payments — from its lenders.
The company on Thursday also reported second quarter fiscal 2023 results, which showed a net loss of $12.4 million on revenue of $38.8 million. In the same period of fiscal 2022, the company made $4.2 million on revenue of $43.5 million.
Those overall results include sales from Landec's Curation Foods business, which Lifecore is in the process of divesting. The core Lifecore operations saw a second quarter revenue drop of 13%.
Lifecore held an earnings conference call on Friday morning but ended it without taking any questions from analysts. The company also withdrew its previously announced guidance for its full fiscal year 2023.
Lifecore retained Morgan Stanley & Co. LLC as its financial adviser for evaluating options. In a statement, the company said that it had not set a timetable for completing its strategic review process and would have no further comment.
Lifecore began in 1965 as Diagnostic Inc. and had previously been a Minnesota-based, publicly traded company. In 2008, a private equity group bought the company, and Landec acquired it in 2010.