LifeVantage Q3 Sales Of Fiscal 2017 $45 Million

LifeVantage Corporation (Nasdaq:LFVN) today reported financial results for its third quarter ended March 31, 2017.

“We began to see the turn in sequential sales momentum as the third quarter progressed,” stated LifeVantage President and Chief Executive Officer Darren Jensen

“While sales were negatively impacted early in the quarter, we finished the third quarter with reaccelerating sales growth as we were finalizing the implementation of remedies relating to a recent review of international policies and procedures.

We enter the fourth quarter with renewed business momentum and completed a successful global convention in April that included our rebranding of several key product lines, the introduction of product bundles that deliver greater value for customers and distributors, and integrated applications and technology solutions that were well received by distributors.

Finally, we are progressing with plans to broaden our geographical footprint, and look forward to discussing specific activities to support this growth as the plan progresses.”

Third Quarter Fiscal 2017 Summary:

• Revenue decreased 19.9% to $45.0 million, compared to $56.2 million in the third quarter of fiscal 2016;
• Revenue in the Americas decreased 21.9% and revenue in Asia/Pacific & Europe decreased 12.5%, both when compared to the comparable period of fiscal 2016;
• Adjusted EBITDA decreased 68.3% to $1.6 million, compared to $5.1 million in the comparable period of fiscal 2016;
• Earnings per diluted share were $0.00, compared to $0.07 in the third quarter of fiscal 2016; and
• Adjusted earnings per diluted share were $0.02, compared to $0.14 in the third quarter of fiscal 2016.

Third Quarter Fiscal 2017 Results

For the third fiscal quarter ended March 31, 2017, the Company reported revenue of $45.0 million, a 19.9% decrease compared to $56.2 million for the comparable period in fiscal 2016. Year-over-year quarterly revenue reflects a decrease of 21.9% in the Americas and a 12.5% decrease in the Asia/Pacific & Europe region.

Revenues in the Company’s United States and Hong Kong markets decreased for the third quarter of fiscal 2017 as the Company continued to take steps to help ensure that the Company’s products are not distributed or sold into countries without complying with applicable customs, tax and other regulatory requirements and to appropriately verify the residency of individuals who want to become independent distributors of the Company. Revenue for the third fiscal quarter ended March 31, 2017, was positively impacted $0.1 million, or 0.2%, by foreign currency fluctuations associated with revenue generated in several international markets.

Gross profit for the third quarter of fiscal 2017 was $36.8 million, or 81.7% of revenue, compared to $46.4 million, or 82.7% of revenue, for the same period in fiscal 2016. Commissions and incentives expense for the third quarter of fiscal 2017 was $22.8 million, or 50.8% of revenue, compared to $28.2 million, or 50.2% of revenue, for the same period in fiscal 2016. Selling, general and administrative expense (SG&A) for the third quarter of fiscal 2017 was $13.7 million, or 30.5% of revenue, compared to $14.6 million, or 26.1% of revenue, in the comparable period of fiscal 2016.

Operating income for the third quarter of fiscal 2017 was $0.2 million, compared to $3.6 million for the third quarter of fiscal 2016. Operating income during the third quarter of fiscal 2017 included approximately $0.6 million for expenses associated with executive severance, recruiting and transition expenses, and $0.1 million of class-action lawsuit expense. Operating income during the third quarter of fiscal 2016 included approximately $0.1 million of costs associated with executive team recruiting and transition expenses. Adjusted EBITDA was $1.6 million for the third quarter of fiscal 2017, compared to $5.1 million for the comparable period in fiscal 2016.

Net income for the third quarter of fiscal 2017 was $0.1 million, or $0.00 per diluted share, calculated on 14.1 million fully diluted shares.  This compares to net income for the third quarter of fiscal 2016 of $1.0 million, or $0.07 per diluted share, calculated on 14.1 million fully diluted shares. Adjusted for net executive severance, recruiting and transition expenses of $0.3 million and class-action lawsuit expense of $0.1 million, all net of tax, adjusted Non-GAAP net income was $0.4 million for the third quarter of fiscal 2017, or $0.02 per diluted share; compared to $2.0 million, or $0.14 per diluted share for the comparable period of fiscal 2016. Non-GAAP adjustments to net income during the third quarter of fiscal 2016 included $0.1 million of executive team recruiting and transition expenses and $1.0 million associated with a write-off of deferred debt transaction costs.

Fiscal 2017 First Nine Months Results
For the nine months ended March 31, 2017, the Company reported net revenue of $148.8 million, a decrease of 3.0% compared to $153.5 million for the first nine months of fiscal 2016. In the first nine months of fiscal 2017, revenue in the Americas decreased 5.6%, while revenue in Asia/Pacific & Europe increased 5.8%. Revenue for the first nine months of fiscal 2017 was positively impacted $3.5 million, or 2.3%, by foreign currency fluctuations associated with revenue generated in several international markets.

Gross profit for the first nine months of fiscal 2017 was $124.3 million, or 83.5% of revenue, compared to $129.0 million, or 84.0% of revenue, for the first nine months of fiscal 2016. Commissions and incentives expense for the first nine months of fiscal 2017 was $72.7 million, or 48.8% of revenue, compared to $77.5 million, or 50.5% of revenue, for the first nine months of fiscal 2016. SG&A for the first nine months of fiscal 2017 was $48.7 million, or 32.7% of revenue, compared to $42.1 million, or 27.4% of revenue, in the prior year period.

Operating income for the first nine months of fiscal 2017 was $2.9 million, compared to $9.3 million for the first nine months of fiscal 2016. Operating income for the nine months ended March 31, 2017 includes $2.7 million for expenses associated with the Audit Committee independent review, $1.1 million for executive severance, recruiting and transition expenses and $0.1 million of class-action lawsuit expense. Operating income in the first nine months of fiscal 2016 includes $1.6 million of executive severance, recruiting and transition expenses as well as $0.1 million for expenses associated with the reverse stock split completed during October 2015. Adjusted EBITDA was $9.8 million for the first nine months of fiscal 2017, compared to $14.1 million for the same period in fiscal 2016.

Net income for the first nine months of fiscal 2017 was $1.5 million, or $0.11 per diluted share, compared to $3.7 million, or $0.26 per diluted share for the first nine months of fiscal 2016. On a tax-adjusted basis, adjusting for previously announced expenses associated with the audit committee independent review of $1.9 million, $0.4 million of costs for net executive severance, recruiting and transition expenses, and $0.1 million of class-action lawsuit expense, adjusted Non-GAAP net income for the nine months ended March 31, 2017 was $3.9 million, or $0.28 per diluted share. On a tax-adjusted basis, adjusting for executive severance, recruiting and transition costs of $0.9 million, along with the $0.1 million for expenses associated with the reserve stock split in October 2015 and $1.0 million associated with a write-off of deferred debt transaction costs, adjusted Non-GAAP net income for the first nine months of fiscal year 2016 was $5.6 million or $0.40 per diluted share.

Fourth Quarter Fiscal 2017 Guidance

The Company is providing guidance for the fourth quarter of fiscal year 2017. The Company expects to generate revenue in the range of $51 million to $54 million during the fourth quarter of fiscal 2017, and anticipates adjusted non-GAAP earnings per diluted share in the range of $0.05 to $0.08.

The Company’s adjusted non-GAAP earnings per diluted share guidance excludes any non-operating or non-recurring expenses that may materialize during the fourth quarter of fiscal 2017. The Company is not providing GAAP earnings per diluted share guidance for the fourth quarter of fiscal 2017 due to the potential occurrence of one or more non-operating, one-time expenses, which the Company does not believe it can reliably predict.

About LifeVantage Corporation

LifeVantage Corporation (Nasdaq:LFVN), is a science-based direct selling company 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®Nrf2 and NRF1 Synergizers, its line of scientifically-validated dietary supplements, the TrueScience® Anti-Aging Skin Care Regimen, Petandim™ for dogs, the AXIO® energy product line and the PhysIQ™ smart weight management system. LifeVantage was founded in 2003 and is headquartered in Salt Lake City, Utah. www.lifevantage.com