LifeVantage Q2 Revenue Down From $52 To $48 Million

 

LifeVantage Corporation recently reported financial results for its second quarter and six months ended December 31, 2014.

Second Quarter Fiscal 2015 Highlights:

Revenue was $48 million compared to $52 million in the prior year period;

Revenue, excluding Japan, increased by 1.6% compared to the prior year period;

Operating income was $3.1 million, compared to $5.2 million in the prior year period;

Repurchased $4.6 million or 3.5 million shares; and

Opened corporate office in Hong Kong.

Dave S. Manovich, Executive Vice Chairman of LifeVantage stated,

We do not believe the overall second quarter results reflect the strength of our distribution network or our expanded, scientifically-validated product line.

In order to improve upon these results and return to meaningful top line growth and reignite growth and enthusiasm in our Company we recently implemented executive changes within our management team.

During the second quarter, we achieved growth in several markets, including our core Americas market, but this was offset by lower sales primarily in Japan. We are disappointed that pressures in the Japan market continue to impact our overall performance and know we can do better in this market as proven by previous results.

We are intensely focused on identifying and implementing corrective actions designed to stabilize our efforts in Japan and improve growth rates in our other countries as well.

Mr. Manovich continued, We are encouraged by our distributors' and customers' positive responses to our expanded product offerings, including Axio and TrueScience, but we need to do a better job of engaging with our distributors to ensure that we are taking the right steps to maximize the sales of our newest products. We also are making progress with our geographic expansion efforts.

In the second quarter, we opened a corporate office in Hong Kong, which we expect will facilitate a more expedited process for purchasing and receiving products in the region. In addition, we remain on track to commence sales in Thailand during the current fiscal year.

Second Quarter Fiscal 2015 Results

For the second fiscal quarter ended December 31, 2014, the Company reported revenue of $48.2 million, compared to $51.5 million for the same period in fiscal 2014. Revenue reflects an increase of 2% in the Americas, and a decrease in the Asia/Pacific region of 23%, primarily due to the decline in Japan. Revenue for the quarter was negatively impacted $1.6 million, or 3%, by foreign currency fluctuation.

Operating income for the second fiscal quarter of 2015 was $3.1 million, compared to $5.2 million in the second fiscal quarter of 2014. Additionally, Adjusted EBITDA was $4.2 million for the second fiscal quarter of 2015, compared to $6.4 million in the prior year period.

Commissions and incentives for the second fiscal quarter of 2015 were $23.2 million, or 48.1% of revenue, compared to $25.4 million, or 49.3% of revenue, in the same period last year. Selling, general and administrative expenses (SG&A) for the second fiscal quarter of 2015 were $14.5 million, or 30.0% of revenue, compared to $13.0 million, or 25.3% of revenue, in the same period last year. The increase in SG&A expenses is a result of the Company continuing to invest in sales, marketing and product development initiatives, primarily due to its investment in the October 2014 Axio product launch.

Net income for the second fiscal quarter of 2015 was $1.5 million, or $0.01 per diluted share, calculated on 100.7 million fully diluted shares. This compares to net income in the second fiscal quarter of 2014 of $3.3 million, or $0.03 per diluted share, calculated on 112.4 million fully diluted shares.

Fiscal 2015 First Six Months Results

For the six months ended December 31, 2014, the Company reported net revenue of $99.9 million, compared to $102.9 million in the prior year period. Revenue in the Americas increased 4%, while revenue in Asia Pacific decreased 16% due primarily to lower sales in Japan. Revenue for the first six months of fiscal 2015 was negatively impacted $2.3 million, or 4%, by foreign currency fluctuation.

Operating income for the first six months of fiscal 2015 was $10.9 million, compared to $10.2 million in the prior year period. Additionally, Adjusted EBITDA was $13.0 million for the first six months of fiscal 2015, compared to $12.7 million in the prior year. First six months fiscal 2015 operating income and Adjusted EBITDA include the benefit of approximately $2 million from proceeds recovered and related to the Company's December 2012 product recall.

Net income for the first six months of fiscal 2015 was $6.2 million, or $0.06 per diluted share, compared to $6.5 million, or $0.06 per diluted share in the prior year period.

About LifeVantage Corporation

LifeVantage Corporation, is a science based network marketing company that is dedicated to visionary science that looks to transform health, wellness and anti-aging internally and externally at the cellular level. The company is the maker of Protandim^®, the Nrf2 Synergizer^® patented dietary supplement, the TrueScience^™ Anti-Aging Skin Care Regimen, Canine Health, and the AXIO^™ energy product line. LifeVantage was founded in 2003 and is headquartered in Salt Lake City, Utah.