LifeVantage Corporation is a leading player in the nutrigenomics industry, dedicated to empowering individuals to achieve their health, wellness, and financial goals. The company's focus on scientifically-validated products and a direct selling model has positioned it as a trusted partner for its growing customer base and independent consultant network.
Business Overview
LifeVantage is a company focused on nutrigenomics, the study of how nutrition and naturally occurring compounds affect human genes to support good health. The company engages in the identification, research, development, formulation, and sale of advanced nutrigenomic activators, dietary supplements, nootropics, pre- and pro-biotics, weight management, skin and hair care, bath & body, and targeted relief products.
The company's flagship product line, Protandim®, has been clinically shown to combat oxidative stress and enhance energy production by increasing the body's natural antioxidant protection at the genetic level. Other key product lines include LifeVantage® Omega+, ProBio, IC Bright®, Daily Wellness, Rise AM, Reset PM, D3+, TrueScience®, Petandim®, AXIO®, and PhysIQ™.
LifeVantage sells its products through a direct selling model, leveraging an international network of independent consultants who operate in an integrated manner across various markets. This model has allowed the company to build a loyal customer base and empower its consultants to establish their own businesses.
Financials
In fiscal year 2023, LifeVantage reported annual revenue of $213.4 million and net income of $2.5 million. The company generated $6.8 million in annual operating cash flow and $3.8 million in annual free cash flow.
For the third quarter of fiscal 2024, the company reported revenue of $48.2 million, down 10.2% year-over-year. This decline was primarily driven by a 14.8% decrease in total active accounts, partially offset by a 6% increase in revenue per consultant. Gross margin for the quarter was 78.9%, compared to 80.2% in the prior year period, due to a shift in product mix, higher inventory obsolescence, and increased manufacturing and fulfillment costs.
Commissions and incentives expense decreased by $4.1 million, or 340 basis points as a percentage of revenue, to 40.9%, reflecting changes in sales mix, timing of promotional programs, and the impact of the company's Evolve compensation plan. Non-GAAP adjusted SG&A expense decreased by $2.7 million, or 190 basis points as a percentage of revenue, to 31%.
Adjusted non-GAAP net income for the quarter was $2.8 million, or $0.21 per diluted share, compared to $1.0 million, or $0.08 per diluted share, in the prior year period. Adjusted EBITDA increased 55% to $5.1 million, or 10.5% of revenue, compared to $3.3 million, or 6.1% of revenue, in the prior year quarter.
Geographic Performance
LifeVantage operates in two geographic regions: the Americas and Asia/Pacific & Europe. In the third quarter of fiscal 2024, revenue in the Americas region decreased 5.9% to $37.2 million, primarily due to a 13.9% decline in total active accounts, partially offset by a 6% increase in revenue per consultant.
Revenue in the Asia/Pacific & Europe region decreased 22.4% to $11.0 million, driven by a 17.1% decrease in total active accounts, the closure of the company's e-commerce business in China, and negative foreign currency impacts, particularly in Japan. Excluding the impact of foreign currency, revenue in the Asia/Pacific & Europe region declined 16.1% year-over-year.
Liquidity
As of March 31, 2024, LifeVantage had $17.4 million in cash and cash equivalents and no outstanding debt. The company recently entered into a new $5 million revolving line of credit, providing additional financial flexibility.
LifeVantage remains focused on capital allocation to drive shareholder value. During the third quarter, the company repurchased $1.9 million worth of common stock, bringing the year-to-date total to $4.6 million. The company also announced a quarterly cash dividend of $0.04 per share, a 14.3% increase from the previous quarter.
Outlook
For fiscal year 2024, LifeVantage expects revenue to be in the range of $202 million to $205 million, down from the previous guidance of $207 million to $213 million. The company anticipates adjusted non-GAAP EBITDA in the range of $16 million to $18 million, with adjusted non-GAAP earnings per share between $0.57 and $0.67.
The revised guidance reflects the company's focus on profitability improvement initiatives, which have driven a return to double-digit adjusted EBITDA margins in the third quarter. LifeVantage remains committed to optimizing its LV360 transformation initiatives, including the expansion of its Evolve Compensation Plan and Rewards Circle customer loyalty program, to drive engagement and productivity among its independent consultants and customers.
Risks and Challenges
LifeVantage faces several risks and challenges, including the ability to properly manage and motivate its independent consultants, the impact of global health crises on its business, the need to comply with regulatory requirements in various markets, and the ability to introduce new products that gain market acceptance. The company also faces competition in the dietary supplement and personal care markets, as well as risks related to intellectual property protection and product liability.
Conclusion
LifeVantage's focus on nutrigenomics, innovative product development, and empowering its independent consultant network has positioned the company as a leader in the personalized wellness industry. Despite near-term headwinds, the company's profitability improvement initiatives and strategic investments in its LV360 transformation have laid the foundation for long-term sustainable growth. As LifeVantage continues to execute on its strategic priorities, it remains well-positioned to capitalize on the growing demand for science-backed health and wellness solutions.