LifeVantage (LFVN) Q1 2027 Earnings Call Transcript

DATE

Monday, Nov. 9, 2026

CALL PARTICIPANTS

• President and Chief Executive Officer - Terrence O. Moorehead
• Chief Financial Officer - Carl A. Aure
• ICR - Reed Anderson

TAKEAWAYS

• Revenue -- $37.1 million, representing a 22% decrease compared to $47.6 million in the prior year period.
• Net Loss -- $200,000 or $0.02 per diluted share, compared to net income of $2.2 million or $0.17 per diluted share a year ago.
• Adjusted Non-GAAP Net Income -- $600,000 or $0.05 per diluted share, reflecting the impact of inventory obsolescence expenses.
• Adjusted EBITDA -- $1.9 million, or 5.2% of revenue, compared to $3.9 million or 8.2% of revenue in the prior year period.
• Americas Revenue -- $29 million, a 22.2% decline driven by lower active accounts and reduced average order sizes.
• Asia/Pacific & Europe Revenue -- $8.2 million, a 21.2% decrease including a 3.9% negative impact from foreign currency rate fluctuations.
• Subscription Revenue -- Represented more than 75% of total revenue in the quarter.
• Active Accounts -- 98,000 total accounts, a 19% decrease compared to 121,000 accounts as of Sept. 30, 2025.
• Active Independent Consultants -- 40,000 total consultants, down 16.7% year over year from 48,000.
• Active Customers -- 58,000 total customers, a 20.5% decrease from 73,000 in the prior year.
• Gross Profit Margin -- 75.4%, compared to 79.5% previously, reflecting higher inventory obsolescence and warehouse expenses.
• Adjusted Non-GAAP Gross Profit Margin -- 78.2%, excluding a $1.0 million inventory allowance related to the MindBody product line.
• Selling, General, and Administrative Expenses -- $12.7 million or 34.3% of revenue, compared to 31.2% in the prior year period.
• Commissions and Incentive Expense -- 41.4% of revenue, compared to 43.5% a year ago due to changes in revenue and customer mix.
• Cash Position -- $13.7 million in cash and cash equivalents with zero debt as of Sept. 30, 2026.
• Capital Expenditures -- $1.2 million, focused on technology infrastructure including a new e-commerce platform.
• Operating Cash Flow -- $500,000 generated during the quarter, compared to $2.3 million used in operations in the prior year.
• Share Repurchase -- Zero shares repurchased during the quarter, leaving $58.5 million remaining under the current authorization.
• Cash Dividend -- $0.05 per share of common stock to be paid on Dec. 15, 2026.
• Effective Tax Rate Guidance -- 20% to 25% for the six-month transition period ending Dec. 31, 2026.
• Foreign Currency Impact -- $400,000 negative impact on total revenue, or approximately 80 basis points.

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RISKS

• Aure stated, "The decrease was primarily driven by continued downward pressure in the number of orders from our active consumer base and lower average order size reflecting impacts from the broader macroeconomic environment," noting the primary cause for the 22% top-line decline.
• Moorehead stated, "The decline was driven by a decrease in both orders and average order size, which reinforces our belief that we need to pursue meaningful change," indicating the current business scale is insufficient.
• Management warned that inventory obsolescence related specifically to the MindBody GLP-1 System negatively impacted gross margins by approximately 280 basis points in the first quarter.

SUMMARY

LifeVantage Corporation (NASDAQ:LFVN) reported a double-digit revenue decline for the first quarter of fiscal 2027 as management initiated a comprehensive strategic transformation. The company is shifting toward a brand-driven, consumer-focused model intended to stabilize a base of active accounts that decreased by 19% year over year. Financial priorities include resetting the cost structure and reinvesting in digital capabilities to modernize the selling proposition. To align strategy with performance cycles, the company will transition its fiscal year to match the calendar year beginning Jan. 1, 2027. Management did not provide formal financial guidance for the upcoming period but emphasized a focus on operational efficiency and the stabilization of average order sizes.

• The company is launching a new marketing campaign for Protandim NRF2 utilizing research on environmental toxins. CEO Moorehead stated, "The new campaign uses before and after images that show the positive impact Protandim has on cells affected by specific environment toxins."
• A new digital e-commerce platform is scheduled for a second-quarter calendar 2027 launch in North America.
• The company plans to introduce a new business suite for sellers in the third quarter of calendar 2027, featuring CRM tools and AI-driven decision-making capabilities.
• CFO Aure indicated that commission and incentive expenses are expected to settle between 41% to 42% of revenue on a full-year basis.
• Management is conducting a review of all selling, general, and administrative expenses to align the cost structure with reduced revenue levels.
• The acquisition of LoveBiome in October 2025 provided a partial offset to revenue declines seen in core product lines.

INDUSTRY GLOSSARY

• MindBody GLP-1 System: A product line targeted at weight management and metabolic health that experienced lower-than-expected sales in the quarter.
• Nutrigenomics: The study of how nutrition and naturally occurring compounds interact with genes to influence health.
• Protandim NRF2: The company's flagship dietary supplement designed to activate natural biological defense systems.
• Active Accounts: The combined total of independent consultants and customers who purchased product within the prior three months.
• LoveBiome: A recently acquired product line focused on gut health and microbiome activation.

Full Conference Call Transcript

Operator: Good day, ladies and gentlemen. Thank you for standing by. Welcome to today's conference call to discuss LifeVantage's first Quarter Fiscal Year 27 Results. At this time, all participants are in a listen-only mode. Following the formal remarks, we will conduct a question-and-answer session. Instructions will be provided at that time for you to queue up. Hosting today's conference will be Reed Anderson with ICR. As a reminder, today's conference is being recorded. And now, I would like to turn the conference over to Mr. Anderson. Please go ahead.

Reed Anderson: Thank you, and good afternoon, everyone. And welcome to LifeVantage Corporation's conference call to results for the quarter ended 09/30/2026. On the call today from LifeVantage, are Terrence O. Moorehead, President and Chief Executive Officer and Carl A. Aure, Chief Financial Officer. By now, everyone should have access to the earnings release which went out this afternoon at approximately 04:05PM Eastern Time. If you have not received this release, it is available on the Investor Relations portion of LifeVantage's website at www.lifevantage.com. This call is being webcast, and a replay will be available on the company's website as well.

Before we begin, we would like to remind everyone that our prepared remarks contain forward looking statements and management may make additional forward looking statements in response to your questions. These statements do not guarantee future performance, and therefore, undue reliance should not be placed upon them. These statements are based on the current expectations of the company's management and involve inherent risks and uncertainties, including those identified in the Risk Factors section of LifeVantage's most recently filed forms 10 ks and 10 Q. Please note that during today's call, we will discuss non GAAP financial measures including results on an adjusted basis.

Management believes these financial measures can facilitate a more complete analysis and greater transparency into LifeVantage's ongoing results of operations particularly when comparing underlying operating results from period to period. We have included reconciliation of these non-GAAP measures with today's release. This call also contains time sensitive information that is accurate only as of the date of this live broadcast 11/09/2026. LifeVantage assumes no obligation to update any forward looking projections that may be made in today's release or call. Now I will turn the call over to Terrence O. Moorehead, President and Chief Executive Officer of LifeVantage.

Terrence O. Moorehead: Thank you, Reed, and good afternoon, everyone. Today, I am going to walk you through some of the initial progress we have made and provide a brief outline of our plans moving forward. Carl is going to walk you through our first quarter performance and financials in a few minutes. But I want to use my time today to focus primarily on where we go from here. I have been with LifeVantage for just over 90 days. And during that time, I have taken the opportunity to listen, learn, and work with our consultants, consumers, employees, and board. I joined the company believing LifeVantage, had far greater potential than its current scale reflects.

And after a comprehensive review of the business, I believe that even more strongly, today. But we have a lot of work to do. In the first quarter, our sales saw revenue decline 22% to $37.1 million and adjusted EBITDA was $1.9 million The decline was driven by a decrease in both orders and average order size, which reinforces our belief that we need to pursue meaningful change. The type of change that we are committed to delivering. Fortunately, we are moving forward from a position of financial stability. We ended the first quarter with $13.7 million in cash, no debt and positive operating cash flow.

We also benefit from strong gross margins, a unique and highly differentiated product line, and a foundation of subscription based accounts. On our last call, I outlined 3 priorities needing attention. The brand, our consumer proposition, and operational excellence and productivity. Over the past 90 days, we have dug deeper and have concluded that we need a comprehensive strategy that reimagines our go-to-market approach our marketing engine, our competitive proposition, and our cost structure if we want to maximize our potential and be prepared to capture the opportunities that lie ahead. The goal is to transform LifeVantage into a brand driven, consumer focused company that leverages digital capabilities to create an expanding community of consumers, and brand advocates.

Our brand, lies at the heart of the transformation. Today, there are thousands of supplement companies essentially selling the same products with the same ingredients and the same benefits to the same consumers. Some offer different forms and features, but beyond their marketing campaigns, many are virtually indistinguishable. LifeVantage, on the other hand, can occupy a much more distinctive space. that is because LifeVantage is built around a fundamentally different proposition. Rather than simply giving the body more ingredients, more products, and more things to take, we develop products designed to work with the body's own biology and activate natural processes that are clinically proven to improve people's health. That distinction lies at the heart of what differentiates LifeVantage.

And it positions the company in a new growing, and ownable white space as the next generation of health and science. Of course, the challenge is to take our differentiated approach to health and science and turn it into a differentiated consumer proposition, and ultimately a differentiated brand. that is the starting point of our strategic roadmap which has 3 major components. The first strategic building block focuses on repositioning the company to change the way people think about LifeVantage and to give consumers a reason to care about the brand. That means repositioning LifeVantage as a next generation nutraceutical company. That positioning builds on our product's unique ability to activate the body's powerful biological systems to improve people's health.

To get started, we are launching a new campaign based on groundbreaking new research that shows how our lead product Protandim NRF2, activates the body's natural defense system to protect the body from environmental toxins like microplastics, pesticides, pollution, and more. For the first time, the new campaign uses before and after images that show the positive impact Protandim has on cells affected by specific environment toxins. it is an exciting new approach designed to create emotional connection with the brand We start with an important consumer outcome which, in this case, is to protect the body from environmental toxins, and we follow-up with simple to understand visuals that provide scientific proof.

Our second strategic building block focuses on reimagining the business proposition. To make it easier to discover, engage with, and share LifeVantage. Our approach is to modernize the business build new capabilities, and align with the way consumers shop and buy today. To be clear, we are focusing on rethinking the selling proposition to make it simpler, more digital, and more attractive while at the same time reimagining the consumer journey to strengthen acquisition, retention, referrals, and social engagement. In the second quarter of calendar year 27, we will launch our new website and a more modern digital platform in North America. Followed by a third quarter 2027 launch of a new consumer driven business suite for sellers.

Our goal is to combine the reach and convenience of an integrated digital ecosystem with the affinity that comes from a community capable of driving engagement around the brand. Our third strategic building block focuses on expanding beyond our current scale and scope to more aggressively penetrate key markets expand share in high potential categories, and identify new growth platforms. I am not going to discuss details here to preserve our strategic interests, However, the overriding principle is focus. We need to become more selective about where we compete and where we invest.

Now I want to be thoughtful about expectations. it is still early, but we realize we need to reset the economics of the business by creating a more focused, tighter organization with improved efficiency. That work is progressing, so I am not gonna get ahead of it, and we are not providing formal guidance today. But shareholders should understand that our transformation agenda addresses both sides of the value creation equation. Finally, before turning the call over to Carl to cover Q1 financials, I want to touch on an additional item that will help our ability to build momentum and strength as we execute our strategy. Starting January 1, 2027, our fiscal year will align with the calendar year.

That means we will have 1 calendar for strategy, planning, budgeting, incentives, innovation, commercial activation, and performance management. it is a relatively simple change with significant implications for how we run the company. And the timing is appropriate as January 1st marks the beginning of the next generation of the company that we are building. With that, I would like to turn the call over to Carl so he can walk you through our financial results in more detail. Carl?

Carl A. Aure: Thank you, Terrence, and good afternoon, everyone. Let me walk you through our financial results for the quarter ended 09/30/2026. Please note that I will be discussing our non GAAP adjusted results where applicable. You can refer to the GAAP to non GAAP reconciliation in today's press release for additional details. We delivered net revenue of $37.1 million in the current quarter, which was down 22% compared to $47.6 million in the same period a year ago. The decrease was primarily driven by continued downward pressure in the number of orders from our active consumer base and lower average order size reflecting impacts from the broader macroeconomic environment as well as lower sales from our MindBody GLP-1 System.

These declines were partially offset by sales of the LoveBiome product line which we acquired in October 2025. Foreign currency also negatively impacted revenue by $400 thousand in the quarter or approximately 80 basis points in the quarter. Revenue in the Americas region decreased 22.2% to $29 million and revenue in the Asia Pacific and Europe region decreased 21.2% to $8.2 million including $400 thousand or 3.9% of the negative impact from foreign currency rate fluctuations. Subscription based revenue continues to provide a substantial portion of our revenue in the quarter. Representing more than 75% of total revenue.

We also recognize another quarter of improvement in our retention metrics for both consultants and customers in comparison to the prior year period. We will continue to focus on improving our retention metrics as we work on strengthening the brand and improving the consumer proposition during calendar year 2027. Our gross profit percentage for the quarter was 75.4%, compared to 79.5% in the prior year period, reflecting higher inventory obsolescence expenses along with higher shipping and warehouse expenses. Excluding the additional inventory allowance related to our MindBody product line, adjusted non GAAP gross profit percentage was 78.2%.

Commissions and incentive expense was 41.4% of revenue, compared to 43.5% a year ago primarily due to the timing and magnitude of promotional and incentive programs changes in revenue mix, and changes in the mix of customers and independent consultants. Selling, general, and administrative expenses were 34.3% of revenue, compared to 31.2% in the prior year period, reflecting the overall decrease in net revenue. As Terrence mentioned earlier, we understand the need to reset the economics of the business and are in the process of carefully reviewing all SG&A spend to become more focused and efficient. GAAP operating loss was $100 thousand compared to operating income of $2.3 million in the prior year period.

Adjusted non GAAP operating income was 900 thousand compared to $2.5 million a year ago. GAAP net loss was $200 thousand or $0.02 per diluted share compared to net income of $2.2 million or $0.17 per diluted share in the prior year period. Adjusted non GAAP net income was $600 thousand or $0.05 per diluted share compared to $2.3 million and $0.18 in the prior year period. We recorded income tax expense of $12 thousand for the quarter, We anticipate that our effective tax rate for the 6 month transition period ending 12/31/2026 will be approximately 20% to 25%.

Adjusted EBITDA for the quarter was $1.9 million or 5.2% of revenue compared to $3.9 million or 8.2% of revenue in the same period a year ago. Our financial position remains strong, with $13.7 million of cash and no debt as of September 30, compared to $14.9 million of cash as of 06/30/2026. We had generated $500 thousand of cash from operations during the quarter compared to $2.3 million used in operations in the prior year period, primarily reflecting decreases in accounts receivable and inventory and the timing of payments of accrued expenses. We also maintain access to a $5 million revolving line of credit with no balance outstanding as of the end of the quarter.

Capital expenditures were $1.2 million during the quarter, compared to $400 thousand in the prior year period, primarily reflecting our continued investment in technology infrastructure including investment in our new e commerce platform. Turning to capital allocation. We did not repurchase any shares during the quarter, and $58.5 million remains under our $60 million share repurchase authorization. We also recently announced a quarterly cash dividend of $05 per share of common stock that will be paid on December 15, 2026, to shareholders of record as of December 1, 2026. We remain committed to our balanced capital allocation strategy in order to maximize shareholder value.

From a reporting standpoint, as Terrence noted, we are changing our fiscal year to align with the calendar year. For the 6 month transition period ending 12/31/2026, in addition to reporting quarterly results, will also file a Form 10-KT including audited financial statements in the first quarter of calendar year 27. Our new 2027 fiscal year will begin on January 1, 2027. Given the recent transition in our chief executive officer role, and our change in fiscal year, we are not issuing formal guidance on today's call. And with that, let me turn the call back over to Terrence. Terrence?

Terrence O. Moorehead: Thanks, Carl. Before we open the call for questions, I would like to leave you with some final thoughts. First, we recognize the need to address the current performance. Our top priority is to stabilize the business and create new opportunities for growth. We have a lot of work to do, but we have much greater clarity around where those opportunities lie, and where we are working to capture them. Second, we are taking action In less than 90 days, we have completed a deep dive on the business, outlined a powerful strategic road map, and have already started implementing the plan starting with a more compelling story around our lead product, Protandim.

We have also started the work required to create a more focused and more efficient operating model. So we are making progress. Third, and finally, we have a solid foundation from which to move forward. We have differentiated products a solid base of subscription buyers, attractive underlying economics, cash on the balance sheet, and no debt. The work ahead is substantial, and the results will not change overnight. But we have greater clarity about what needs to change how we can compete and how we intend to create value. We will enter 2027 with a new calendar a new strategic road map, and a clear mandate to build a stronger, more relevant, and more disciplined company.

With that, let's open the line for questions.

Operator: We will now be conducting a question-and-answer session. If you would like to ask a question, please press 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press 2 if you would like to remove your question from the queue. Before pressing the star keys. 1 moment, please, while we poll for questions. Our first question is from Linda Bolton Weiser with Water Tower Research. Please proceed with your question.

Linda Weiser: Yes. Hi. So first of all, Terrence, you alluded to the new campaign that you are starting here. Can you talk about what methods you use? I assume this is digital communication to convey the advertising message. that you want to reach new potential customers. So can you talk about how you are communicating that message out to out to the world, out to consumers? Thanks.

Terrence O. Moorehead: Yeah. Hi, Linda. Good to hear from you, and thanks for the question. Yeah. We are gonna start with our distributor base so that will be our first kind of line of attack We also have a pretty extensive email marketing campaign that we are going to--that we are going to be--that we will be using. So that will include--we have got more than a half million kind of names we will be tracking down and going after. We will build out our the rest of our kind of digital campaign as the New Year begins.

So our first kind of starting point will be kind of more economically focused kind of high potential hot leads, and then we will take it from there.

Linda Weiser: Okay. And then you alluded to third quarter calendar 27, a new business suite for sellers. So can you elaborate on that just a tiny bit? Do you mean, like, a new suite of product offerings, like products that are bundled together Or are you more talking about a different kind of commission structure? Thanks.

Terrence O. Moorehead: No. This will be more along the lines of a toolkit for them. So it will be really a next generation toolkit that will allow them to manage their businesses more effectively, do CRM marketing, so email outreach, text kind of outreach. It will allow them to populate their social media more effectively. So they will have a whole series of marketing tools on this platform, training tools, recognition, etcetera. So it really is trying to pull together a I would call it a business environment for that next generation entrepreneur kind of what they are looking for and what they need, not only to kind of manage their business, but also to expand it going forward.

So it really is about their toolkit. And then, ultimately, that will include things like AI support, AI coaching, and AI decision making tools as well for them. But that is kind of 12 to 18 months out.

Linda Weiser: Got it. So in terms of the cost to develop all of these things you are talking about, You talked about changing the economic or adjusting the economics of the business. So am I to understand that you are kind of gonna find some cost reductions and then some of that will be reinvested back in the business? Is that kind of the way to think about it?

Terrence O. Moorehead: It is. Exactly. But as far as, you know, kind of creating the new tools, you know, that is all going to be capital. And then to your point, when it comes to, you know, rethinking and reimagining our SG&A and the expenses driving the business today, that is where we will be kind of looking at looking at and making resource reallocation decisions that will allow us to be more efficient, more productive, but then also having funds to reinvest for growth.

Linda Weiser: Okay. And then if I could ask about just your commissions and incentives line. The rate-- well, Linda, you dropped out on us.

Terrence O. Moorehead: Can you repeat your question?

Linda Weiser: That will make that ratio kind of go down again in FY 2027. Maybe you could just help us understand the dynamics of that expense item.

Terrence O. Moorehead: I think you went out for a minute, Linda. Could you repeat your question? Could not quite hear. Could not hear the most of it.

Linda Weiser: Oh, yeah. Sorry. Sorry. I was asking about the commissions and incentives expense line and how that ratio had gone down quite a bit in FY 2026. And that I am wondering what--I know there is mix issues that affect that ratio. But is that something that is kind of. there is a that it will go down again in FY 2027? Or just help us understand better how that expense line works.

Terrence O. Moorehead: I will let Carl take that 1.

Carl A. Aure: Yeah. No. I am happy to take that, Linda. Yes, the biggest piece that is influencing that rate here in the quarter is definitely mix issues. So it is revenue mix And, also, just the way the payout between customers and consultants at the end of the day. But when I look forward to the, you know, future quarters and the rest of the year, I do not anticipate that percentage is going to go down much further. I think from a expectation standpoint, in between 41% to 42% is where we are going to settle. there is always a little bit of variability when we throw we have the incentives, outside incentive trips and other things that influence that.

But on a full year basis, that 41% to 42% is where I expect commissions to be going forward.

Linda Weiser: Okay. Thank you. And then you mentioned that free cash flow in the quarter or operating cash flow was positive. But then you mentioned timing of some items. So are some items going to reverse and you know, you might end up with worse cash flow in FY 2027? I am just trying to understand if there is an inflection point in cash flow or if it is just timing going on here.

Carl A. Aure: Yeah. No. I think the timing that I was referring to in my portion of script is really in comparison to the prior year. So if you were looking at the changes compared to last year versus this year, we had some very large accrued expenses at the end of the prior year period. That were influencing the cash flow there. If I am isolating just the current quarter, where we generated free cash flow from operations. And then looking forward, we do expect that trend to continue, and I would not think there would be as large of these unusual timing based items. It should be more predictable going forward.

Linda Weiser: Okay. Thank you. And then did I catch you. It correctly that you are. You paid a stock dividend? I thought the dividends up till now were cash. Dividends. Or did I misunderstand that? Is it a cash dividend?

Carl A. Aure: Yeah. Yeah. Sorry, Linda. Yeah. They are all just cash dividends. So all of the dividends that we paid historically and the dividend that we just announced in connection with today's call, they are all cash related dividends.

Linda Weiser: Okay. Great. And then just my last question is about capital spending. So it was a little higher. I think it was $1 million or something in the quarter. You know, there is some investments to make in IT and everything. So going forward, is this, like, $4 million a year, $3 million a year? What would you say CapEx in the next 12 months or so is going to be roughly?

Carl A. Aure: Yeah. it is going to be pretty close to that, Linda. If you look at in the current quarter, we are about $1 million in CapEx, which was a little elevated over where we have been previously and the majority of that relates to our e commerce platform. I would anticipate similar levels, probably in that around $1 million a quarter for the next couple of quarters, and then things will start to tail off a little bit. But it is still going to be on an annualized spend until we get through the ecommerce platform and the business--the new business suite that we talked about. The annualized spend there is going to be $3 million to $3.5 million.

And even then, we will continue to invest to augment the services and the capabilities that we can provide.

Terrence O. Moorehead: Right.

Linda Weiser: Okay. Thank you very much. Thank you for taking my questions.

Terrence O. Moorehead: Thanks, Linda.

Operator: We have reached the end of the question-and-answer session. I would like to turn the floor back over to Terrence O. Moorehead for closing comments.

Terrence O. Moorehead: Okay. Well, thank you, everybody, for joining us today and for your continued support. And I look forward to speaking with you again next quarter. Alright. Take care. Bye now.

Operator: This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.

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