Lifecore Biomedical's Strategic Positioning for Long-Term Growth in the CDMO Sector

In the rapidly evolving Contract Development and Manufacturing Organization (CDMO) sector, companies that balance innovation with operational discipline are poised to outperform. Lifecore Biomedical (LFCR) has emerged as a compelling case study in capital-efficient scalability and margin expansion, leveraging strategic partnerships, operational restructuring, and technological modernization to position itself for sustained growth.

Strategic Expansion in the CDMO Sector

Lifecore's recent foray into new therapeutic areas underscores its ambition to diversify beyond its traditional ophthalmic therapeutics niche. In 2025, the company secured agreements with a leading developer of GLP-1 therapeutics for obesity and a Phase 2 dermatology program, signaling its intent to capture high-growth markets, according to the Financial Release Details. Additionally, Lifecore signed a commercial site transfer agreement with a multinational pharmaceutical company, becoming the supplier for a key injectable product after regulatory approval, as reported by StockTitan. These moves not only broaden its customer base but also align with industry tailwinds, such as the surge in demand for sterile injectables and the shift toward domestic U.S. manufacturing.

The company's ability to secure nine new programs with new customers in fiscal 2025 further highlights its competitive positioning. By expanding its pipeline to include pre-clinical formulation development for early-stage biotechs, Lifecore is locking in long-term relationships that could translate into recurring revenue streams, as detailed in the Financial Release Details.

Capital-Efficient Scalability: Restructuring and Technology

Lifecore's focus on capital efficiency is evident in its operational overhauls. Under new leadership, the company implemented cost-cutting measures, including workforce right-sizing and reduced SG&A expenses as a percentage of revenue. These initiatives improved revenue per direct labor employee, a critical metric for scalable growth, as noted in the Financial Release Details.

A pivotal step in this strategy is the planned deployment of a new enterprise resource planning (ERP) system in early 2026. As stated by Lifecore, this system aims to enhance operational transparency, reduce manual processes, and drive further cost savings-a move that could amplify margins without significant CAPEX outlays, according to the Financial Release Details. While specific CAPEX efficiency metrics remain undisclosed, the company's emphasis on performance-driven culture and productivity gains suggests a disciplined approach to resource allocation.

Margin Expansion: Progress and Challenges

Lifecore's path to margin expansion has been marked by volatility. Operating margins swung from -61.90% in 2023 to 7.42% in 2024, only to dip to -30.01% by November 2025, according to the Lifecore Biomedical (LFCR) - Operating Margin. This turbulence reflects the challenges of scaling while managing interest expenses and asset-related costs. However, the company's Adjusted EBITDA of $19.5 million in fiscal 2025 demonstrates underlying operational strength, with management projecting a trajectory toward 25%+ adjusted EBITDA margins in the medium term, as reported in the Financial Release Details.

The 26% year-over-year revenue growth in the September 2025 quarter-driven by hyaluronic acid manufacturing and strategic initiatives-further supports optimism about margin normalization, according to the Manila Times. With a revised full-year revenue guidance of $128.9 million and a mid-term target of 12%+ revenue CAGR, Lifecore is balancing top-line growth with disciplined cost management, as noted in the Manila Times article.

Conclusion

Lifecore Biomedical's strategic pivot toward diversified therapeutic areas, coupled with operational efficiency gains and technological modernization, positions it as a resilient player in the CDMO sector. While near-term margin pressures persist, the company's focus on capital-efficient scalability-through restructuring, automation, and strategic partnerships-provides a clear roadmap for long-term margin expansion. Investors should monitor the ERP implementation in 2026 and the execution of its new customer pipeline as key catalysts for value creation.