LifeVantage Q3 Revenue Up 12.3% To $50.6 Million

LifeVantage Corporation (Nasdaq:LFVN) today reported financial results for its third quarter ended March 31, 2018.

Third Quarter Fiscal 2018 Summary:

• Revenue increased 12.3% to $50.6 million year over year and 2.2% sequentially;
• Revenue in the Americas increased 10.6% and revenue in Asia/Pacific & Europe increased 18.0% including a 10.1% increase in Japan, both on a year over year basis. On a sequential basis, all geographical regions generated growth, with the exception of Japan, which followed its typical seasonal pattern from the second to third quarter;
• Active independent distributors stayed consistent and active preferred customers decreased 0.9% year over year and increased on a sequential basis 1.6% and 1.9%, respectively;
• Adjusted EBITDA increased 109.8% year over year to $3.4 million;
• Earnings per diluted share were $0.12, up from $0.00 in the prior year period; and
• Adjusted earnings per diluted share were $0.12, up from $0.03 in the prior year period.

‘We are pleased to report stronger third quarter sales growth on both a sequential and year over year basis,’

stated LifeVantage President and Chief Executive Officer Darren Jensen.

We are beginning to see the benefits of our 2018 key initiatives, which are driving sales growth and improvements in our key metrics. March was the highest recruitment month in three years and retention of both distributors and preferred customers increased during the third quarter.

Our Stacks product strategy is performing ahead of plan and drove a 23% increase in average order size during the third quarter. Our sales growth is delivering improved earnings and we are increasing the midpoint of our adjusted earnings per share guidance as a result. We look forward to continuing to build upon the recent success by driving each of our initiatives focused on geographical expansion, distributor and customer acquisition and increasing average order size.’

Third Quarter Fiscal 2018 Results

For the third fiscal quarter ended March 31, 2018, the Company reported revenue of $50.6 million, an increase of 12.3% as compared to $45.0 million in the third quarter of fiscal 2017. Revenue in the Americas for the third quarter increased 10.6% compared to the third quarter of fiscal 2017 and revenue in the Asia/Pacific & Europe region increased 18.0% compared to the third quarter of fiscal 2017. Revenue in Japan increased 10.1% compared to the third quarter of fiscal 2017. Revenue for the third quarter of fiscal 2018 was positively impacted $0.8 million, or 1.8%, by foreign currency fluctuations associated with revenue generated in several international markets when compared to the third quarter of fiscal 2017.

Gross profit for the third quarter of fiscal 2018 was $41.6 million, or 82.4% of revenue, compared to $36.8 million, or 81.7% of revenue, for the same period in fiscal 2017. Commissions and incentives expense for the third quarter of fiscal 2018 was $24.3 million, or 48.1% of revenue, compared to $22.8 million, or 50.8% of revenue, for the same period in fiscal 2017. Selling, general and administrative expense (SG&A) for the third quarter of fiscal 2018 was $15.0 million, or 29.7% of revenue, compared to $13.7 million, or 30.5% of revenue, for the same period in fiscal 2017.

Operating income for the third quarter of fiscal 2018 was $2.3 million, compared to $0.2 million for the third quarter of fiscal 2017. Operating income during the third quarter of fiscal 2018 included approximately $0.1 million for expenses associated with executive severance, recruiting and transition and approximately $0.1 million for expenses associated with class-action lawsuits.

Adjusted EBITDA was $3.4 million for the third quarter of fiscal 2018, compared to $1.6 million for the comparable period in fiscal 2017.

Net income for the third quarter of fiscal 2018 was $1.6 million, or $0.12 per diluted share. This compares to net income for the third quarter of fiscal 2017 of $0.1 million, or $0.00 per diluted share. Adjusted for class-action lawsuit expense of $0.1 million and executive severance, recruiting and transition expenses of $0.1 million, net of $0.1 million of tax impacts of these adjustments, adjusted Non-GAAP net income was $1.8 million for the third quarter of fiscal 2018, or $0.12 per diluted share, compared to $0.4 million, or $0.03 per diluted share for the comparable period of fiscal 2017. Non-GAAP adjustments to net income during the third quarter of fiscal 2017 included executive severance, recruiting and transition expenses of $0.4 million and class-action lawsuit expense of $0.1 million, net of $0.2 million of tax impacts for these adjustments.

Fiscal 2018 First Nine Months Results

For the first nine months of fiscal 2018, the Company reported net revenue of $149.2 million, an increase of 0.2% compared to $148.8 million for the first nine months of fiscal 2017. In the first nine months of fiscal 2018, revenue in the Americas decreased 0.9%, while revenue in Asia/Pacific & Europe increased 3.7%. Revenue for the first nine months of fiscal 2018 was negatively impacted $0.1 million, or 0.1%, by foreign currency fluctuations associated with revenue generated in several international markets.

Gross profit for the first nine months of fiscal 2018 was $122.4 million, or 82.0% of revenue, compared to $124.3 million, or 83.5% of revenue, for the first nine months of fiscal 2017. Commissions and incentives expense for the first nine months of fiscal 2018 was $71.1 million, or 47.7% of revenue, compared to $72.7 million, or 48.8% of revenue, for the first nine months of fiscal 2017. SG&A for the first nine months of fiscal 2018 was $45.2 million, or 30.3% of revenue, compared to $48.7 million, or 32.7% of revenue, for the first nine months of fiscal 2017.

Operating income for the first nine months of fiscal 2018 was $6.0 million, compared to $2.9 million for the first nine months of fiscal 2017. Operating income for the first nine months of fiscal 2018 includes approximately $0.3 million for expenses associated with class-action lawsuits, approximately $0.3 million associated with executive severance, recruiting and transition expenses and approximately $0.1 million associated with non-recurring legal and accounting expenses.

Operating income in the first nine months of fiscal 2017 included approximately $2.7 million for expenses associated with the audit committee review, approximately $0.6 million associated with executive severance, recruiting and transition expenses and $0.1 million associated with class-action lawsuits. Adjusted EBITDA was $9.7 million for the first nine months of fiscal 2018, compared to $9.8 million for the same period in fiscal 2017.

Net income for the first nine months of fiscal 2018 was $2.8 million, or $0.20 per diluted share, compared to $1.5 million, or $0.11 per diluted share for the first nine months of fiscal 2017. Adjusted for class-action lawsuit expenses of $0.3 million, severance, recruiting and transition expenses of $0.3 million, and non-recurring legal and accounting expenses of $0.1 million, net of $0.2 million of tax impacts of these adjustments, and $1.2 million of one-time, non-cash tax expense associated with the re-valuation of deferred tax assets to the new federal corporate tax rate, adjusted Non-GAAP net income for the first nine months of fiscal 2018 was $4.4 million, or $0.31 per diluted share.

Adjusted for expenses associated with the audit committee review of $2.7 million, $0.6 million of costs for executive severance, recruiting and transition expenses and class-action lawsuit expenses of $0.1 million, net of $1.0 million of tax impacts of these adjustments, adjusted Non-GAAP net income for the first nine months of fiscal year 2017 was $3.9 million, or $0.28 per diluted share.

About LifeVantage Corporation

LifeVantage Corporation is a science-based health, wellness and anti-aging company dedicated to helping people transform themselves internally and externally at a cellular level. Its scientifically-validated product lines include Protandim® Nrf2 and NRF1 Synergizers, TrueScience® Anti-Aging Skin Care Regimen, Petandim® for Dogs, AXIO® Smart Energy and the PhysIQâ„¢ Smart Weight Management System.

LifeVantage was founded in 2003 and is headquartered in Salt Lake City, Utah. For more information, visit www.lifevantage.com.