Good afternoon, and thank you for joining us today to discuss Lifecore Biomedical's Third Quarter 2025 Earnings results for the 3 months ended September 30, 2025. As we announced in August, the company has changed its fiscal year-end to align with the calendar year, beginning with today's Q3 2025 results for the 3 months ended September 30, 2025. We will be comparing our 2025 results to the closest comparable period in the prior year. Today, we will be comparing our Q3 2025 period for the 3 months ended September 30, 2025, with the period ending August 25, 2024. Going forward, our fiscal year-end will end on December 31, and we plan to announce results for Q4 and the approximately 7-month transition period from May 26 to December 31, 2025, and March of 2026. Hosting the call today from Lifecore are Paul Josephs, President and Chief Executive Officer; and Ryan Lake, Chief Financial Officer. Before we begin today, we'd like to remind everyone that certain statements made in the course of this conference call contain forward-looking statements. It is important to note that the forward-looking statements made during this call reflect management's judgment and analysis only as of today, November 6, 2025, and the company's actual results could differ materially from those projected in such forward-looking statements. For a more thorough discussion of the risks and uncertainties associated with any forward-looking statements, please see the disclaimer regarding forward-looking statements that is included in our earnings press release for our third quarter ended September 30, 2025, which was furnished to the SEC today on Form 8-K and is available on our corporate website at lifecore.com as well as our other filings with the Securities and Exchange Commission, including, but not limited to, the company's Form 10-Q for the third quarter ended September 30, 2025, which was filed this afternoon and is also available on our website. In addition, our earnings press release includes a discussion of and during this call, we will reference certain non-GAAP information. You can find relevant non-GAAP reconciliations in our earnings press release. With that, I'd like to turn the call over to Paul Josephs, Chief Executive Officer.

Thank you, Stephanie. Good afternoon, everyone, and thank you for joining us for our third quarter 2025 update for the 3 months ended September 30, 2025. Lifecore is a differentiated injectable CDMO with a strong foundation in high-grade hyaluronic acid that has served as our entry point into this exciting and growing market. We are well positioned for future growth with a forecasted inflection point with our largest customer in 2027, a promising late-stage pipeline, which has significant revenue potential and finally, a revamped commercial strategy that has expanded our target market and is already delivering impressive results. Collectively, we believe these strengths will drive meaningful growth in the midterm while increasing EBITDA margins. We are thrilled with the progress made during this period as we made advancements in all key areas. Our financial outcomes were strong as we recorded a 26% increase in revenue as compared to the comparable prior year period with other significant improvements in adjusted EBITDA and associated margins. These financial results reflect management's disciplined approach to cost control and the continued improvement in our workforce productivity driven by initiatives we implemented earlier this year. From a quality perspective, following our successful FDA inspection in March, we conducted five customer audits during the period, including a due diligence audit with a large multinational pharmaceutical company. All audits were positive, reinforcing our confidence in the organization's ability to support the growing quality demands of our clients. From a growth perspective, we achieved critical milestones in expanding our commercial business and advancing our late-stage pipeline programs. Finally, we continue to accelerate our business development efforts, and we are seeing progress. During the third quarter, we signed two new business wins and made substantial progress on two additional new projects that were signed subsequent to quarter end. On all…

Thank you, Paul, and good afternoon, everyone. In conjunction with my comments, I'd like to recommend that participants refer to Lifecore's Form 10-Q filing with the Securities and Exchange Commission, which we filed today. As a reminder, today, we will be comparing our Q3 2025 period, which ended on September 30, 2025, with the period ending August 25, 2024. Revenues for the 3 months ended September 30, 2025, were $31.1 million, an increase of 26% compared to $24.7 million for the comparable prior period ended August 25, 2024. The increase in revenues of $6.4 million was primarily due to a $4.8 million increase in HA manufacturing revenues, primarily from increased demand from a customer due to its supply chain initiatives. In addition, CDMO revenues increased $1.6 million, which was primarily from $2.6 million of higher sales volumes and $0.3 million of pricing and other revenue, partially offset by $1.3 million of lower development revenue due to completion of a discrete development project in the prior comparable period and timing of customer project life cycle. Gross profit for the 3 months ended September 30, 2025, was $7.8 million compared to $5.4 million for the comparable prior period ended August 25, 2024. The increase of $2.4 million in gross profit is due to $4.3 million increase in HA manufacturing gross profit due to increased sales volume and manufacturing absorption, partially offset by $1.9 million decrease in CDMO gross profit. The CDMO decline was due to lower development revenues of $1.4 million and a decrease in aseptic gross profit of $1.9 million due to product mix and costing, partially offset by favorable manufacturing absorption of $1.4 million. Selling, general and administrative expenses for the 3 months ended September 30, 2025, were $8.9 million compared to $14.8 million for the comparable prior period ended…

Thank you, Ryan. In closing, I would like to emphasize our discipline and effective execution over the last 18 months. We have learned a tremendous amount in this period. We have improved our business in a number of meaningful ways, and we have now turned our full efforts to growth of both our top and bottom line. We are energized by the progress we have made to date and highly optimistic about the future that lies ahead. This concludes our prepared remarks for today. Operator, you may now open the call for questions.

[Operator Instructions] Our first question comes from Matt Hewitt from Craig-Hallum Capital Group.

Congratulations on your progress. Maybe first up, obviously, with the stub period, it makes it a little bit difficult to run the math here, but I'm trying to get a sense for what the missing month would have been or what that would have meant implied maybe even for Q4, just as we're looking at the period-to-period numbers.

Matt, thanks for your question. So the June estimated revenues were about $8.7 million with about $6.6 million of that coming from CDMO revenues and $2.1 million from HA revenues. So year-to-date, through September 30, the stub period revenue is expected to be approximately $39.8 million. So that leaves for the remaining stub period revenue guidance for Q4 to be in a range of $34 million to $36 million or about $35 million at the midpoint, which represents for the fourth quarter, about an 8% increase over the comparable prior year quarter. And then for adjusted EBITDA, June estimated adjusted EBITDA was $1.5 million. So year-to-date through September 30, the stub period adjusted EBITDA would have been approximately $4.6 million. So that leaves the remaining stub period guidance to be in a range of $7 million to $9 million or about $8 million at the midpoint for Q4.

Super helpful. And then just kind of looking and listening to your prepared remarks, you guys have made some substantial improvements on the cost side. I think you mentioned some pretty significant reductions on the recurring piece as well as some of those legacy. Is there much left to do on that front? Or as we look out, whether it's Q4 or now the new fiscal/calendar year '26, are there some additional levers to pull there? Or at this point, does it become more about driving incremental volume through the facility?

Thanks, Matt. So I'm really excited to talk about the positive results this quarter that reflects some of the great progress that we've made across the organization. First, I think this represents our fourth or fifth sequential quarter of period-over-period declines in operational expenses. The operational expenses were down over $6 million or 36% compared to the prior year comparable quarter. And over $2 million of that is primarily related to the reduction in the recurring accounting, legal and consulting expenses and $4 million was related to legacy matters. I think that to the second part of your question, there's a lot of hard work left, but I'm even more encouraged than I was earlier on kind of in this journey that we have the ability to continue to strengthen the foundation of the company and set us up for continued growth. I think overall, over time, as we get past some of these legacy matters, I think we could see another $1.5 million or so a quarter in SG&A that it could come down so that we were at a quarterly run rate of like in that $7.5 million to $8 million range.

Our next question comes from Mac Etoch from Stephens.

This is actually Hannah on for Mac. Given the recent manufacturing capacity announcements, can you just talk about how early conversations are progressing given the current macro dynamics and how those might translate to the pipeline over time?

Hannah, thanks for the question. This is Paul. I think that the -- I'll call it, the regionalization of manufacturing and the investments that have been announced recently are only a tailwind for CDMOs in general and certainly for Lifecore. We have seen a buoying in our pipeline of, I would say, commercial site transfer opportunities from other regions, whether it's Asia, Europe, Israel, India that heretofore, we haven't seen. I've been in this commercial side of the CDMO business now, had exposure to it for 31 years, and I've never seen this many or this amount or percentage of commercial site transfers become -- that you have the opportunity to compete on. So I look at it as only buoying the market from a CDMO perspective.

Awesome. That's helpful. And then on performance in 3Q and then current guidance, it seems to suggest a pretty strong calendar second half compared to normal seasonality. And I believe you had prior expectations for a flat fiscal 2026 using your prior fiscal year. So can you just talk about what's driving the uptick in revenue?

Thanks, Hannah. So we had a very strong kind of back half of what was our fiscal year '25 that ended in May. And comparatively, primarily due to timing and customer ordering patterns, revenue for the 7-month stub period or essentially the second half of calendar year '25 are expected to be up significantly. So over 20% or about $14 million compared to an estimate of that same period of the prior year. Because of that nice uptick in revenue for the stub period in calendar year '25 due to the timing and customer ordering patterns, we currently expect the back half of calendar year '26 to be stronger than the first half of calendar year '26 with revenue split probably in that 45% in the first half and about 55% in the back half.

Our next question comes from Lucas Baranowski from KeyBanc.

This is Lucas on for Paul Knight here at KeyBanc. You recently won a tech transfer for a commercial product from a large pharma company. I know those types of transfers typically take over a year to complete. But what are you expecting in terms of the time line for this particular agreement?

Lucas, this is Paul. Thanks for the question. We expect that, that commercial site transfer will take approximately 24 to 30 months. We're working with our customer on the exact time line, but we'll obviously work to accelerate as quickly as we can. But based on current projections, I would anticipate 24 to 30 months.

Yes, that's good color. You recently also signed a collaboration agreement with a peptide-based CDMO called polypeptide. Based upon your discussions with them, would you expect the opportunities coming out of that collaboration to be centered around GLP-1 where you got your first win last quarter? Or do you think it could be broader than that?

I think it could be broader than that, Lucas. Certainly, that GLP-1s are contemplated as part of that, but certainly, it could be broader.

Our next question comes from Max Smock from William Blair.

It's Christine Rains on for Max. So kind of piggybacking a little bit off the last question in terms of the commercial injectable win. Just hoping if you could give a little bit more context here. So it was helpful that 24 to 30 months potentially as being sort of fully ramped commercially, but wondering if you expect revenues before this full transfer is complete and if you expect to be the sole product manufacturer? And just anything you can give in terms of the scope of the contract in terms of annual revenue expected?

No. Christine, thank you so much for the question. We do expect to be the sole manufacturer and fully qualified. Based on 2025 revenues, once this product is commercialized, demand remains the same, we anticipate this will be a top 5 customer or top 5 product at Lifecore and consume, I will say, material capacity within the facility between 5% and 10%. We will make what I call or characterize as onetime development revenue where we qualify and validate the program and product within our facility. And then once we get regulatory approval, obviously, we'll get into that recurring revenue cadence.

Great. That was very helpful. So maybe one for you, Ryan, echoing kind of what we said before, there's a lot of moving pieces with the transition period and your financials. So I apologize for a bit of the rough approach here. I kind of already asked on the revenue side, but thinking simplistically in terms of margins. Looking at your implied EBITDA margin guide of 17% at the midpoint for the stub period compared to roughly 10% adjusted EBITDA margin in this 3-month period. I'm hoping you can speak to the factors driving margin expansion in the remainder of the stub period in order to achieve your stub margin target.

Yes. I think one of the pieces that you're missing and I gave was the EBITDA for, I guess, the year-to-date stub period, right? And it's pretty significant. Again, if you add $1.5 million or so to the year-to-date stub period from the June period, so about $4.6 million. So leaving that roughly $9 million to -- $7 million to $9 million or $8 million at the midpoint for that. And again, a lot of that has to do with the improvement in revenue over the period as well as all the improvements we've made from a gross profit perspective as well as improvements in the SG&A line. So overall, I think that the improvement is about a 200 basis point improvement for the stub period to get you to roughly those 17% EBITDA margins.

At this time, I'm showing no other questions. So this concludes the Q&A portion of this program. I would now like to hand it over to Paul Josephs of management for closing remarks. The floor is yours.

Thank you, operator. I wish to thank all of Lifecore's stakeholders and supporters, including our investors, customers and collaborators for their ongoing support and partnership. I also wish to thank our talented and committed employees for all they do to elevate Lifecore and maximize our successes. We are very pleased with the progress we made during this period, which we believe puts us on a path to achieving growth and sustained profitability for the years ahead. Thank you very much.

Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.