LifeVantage Corporation (LFVN) Q2 2026 Earnings Call Transcript

Access earnings results, analyst expectations, report, slides, earnings call, and transcript.

Overview

The earnings call reflects mixed signals: declining financial performance with reduced net income and cash from operations, but optimistic guidance and strategic initiatives, including the LoveBiome acquisition and Shopify partnership. The Q&A highlighted concerns about declining sales and unclear consultant/customer metrics. The positive aspects, like new product launches and market expansion, are balanced by financial challenges, leading to a neutral sentiment. Without market cap data, the stock's sensitivity to these mixed signals remains uncertain, suggesting a neutral impact over the next two weeks.

Key Financial Performance

Net Revenue $48.9 million, down 27.8% year-over-year from $67.8 million in Q2 fiscal 2025. The decline was primarily driven by a $16.2 million decrease in sales of the MindBody GLP-1 system, partially offset by $4.1 million in revenue from the LoveBiome product line.

Revenue in the Americas $38.5 million, down 32.6% year-over-year. The decline was driven by lower sales of the MindBody GLP-1 system and a 25.2% decrease in total active accounts, mostly from decreases in the active customer base.

Revenue in Asia Pacific and Europe $10.4 million, down 2.1% year-over-year. The decline reflected a 6.5% decrease in total active accounts, though revenues increased slightly in Japan on a constant currency basis.

Gross Profit Percentage 74%, down from 80.5% in the prior year period. The decrease was due to a one-time allowance for inventory obsolescence related to MindBody inventory and increases in shipping and warehouse-related expenses. Excluding the $2.4 million one-time inventory reserve, the adjusted gross profit percentage was 78.8%.

Commissions and Incentive Expense 40.7% of revenue, down from 48% in the prior year period. The decrease was due to elevated incentive-related expenses in the prior year and changes in the mix of customers and consultants in the active account base.

Selling, General, and Administrative Expenses $15.8 million or 32.3% of revenue, compared to $18.6 million or 27.5% of revenue in the prior year period. The increase as a percentage of revenue was due to the overall decrease in sales volume and elevated event-related expenses.

GAAP Operating Income $0.5 million, down from $3.4 million in the prior year period.

Adjusted Non-GAAP Operating Income $2.6 million, down from $3.9 million in the prior year period.

GAAP Net Income $0.3 million or $0.02 per diluted share, down from $2.6 million or $0.19 per diluted share in the prior year period.

Adjusted Non-GAAP Net Income $1.9 million or $0.15 per diluted share, down from $3 million or $0.22 per diluted share in the prior year period.

Adjusted EBITDA $3.9 million or 7.9% of revenues, down from $6.5 million or 9.6% in the prior year period.

Cash from Operations $0.5 million for the first 6 months of fiscal 2026, down from $8.6 million in the same period in fiscal 2025. The decrease was due to the timing of incentive payments, payments of other accrued liabilities, and other working capital changes.

Capital Expenditures $1.5 million for the first 6 months of fiscal 2026, up from $0.8 million in the prior year period, reflecting continued investment in technology infrastructure.

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Operating Highlights

MindBody GLP-1 system: Sales declined due to increased competition from pharmaceutical GLP-1 drugs, which are now more affordable and accessible. The company is recognizing a reserve against a portion of its GLP-1 inventory and evaluating cost reduction opportunities.

LoveBiome products: Two new products launched: AXIO X (pre-workout energy) and PhytoPower B (sugar absorption blocker). Additional LoveBiome products are planned for launch in the coming months.

P84 product: Continues to perform well in the microbiome market, supported by strong scientific validation and consumer adoption.

International expansion: Opportunities for growth in key markets are being explored, leveraging infrastructure from the LoveBiome integration.

Shopify partnership: Progressing on schedule, expected to enhance e-commerce capabilities and improve customer experience.

Cost reduction: Evaluating opportunities to reduce costs to maintain profitability amidst declining sales.

LoveBiome acquisition: Successfully integrated, realizing operational synergies, and contributing to product diversification and market growth.

Share repurchase program: Announced a new $60 million share repurchase program, replacing the prior program, to drive long-term shareholder value.

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Risk or Challenges

Revenue Decline: The company's Q2 revenue and earnings were significantly down from prior year levels, primarily due to a decline in sales of the MindBody GLP-1 system. This was attributed to increased competition from pharmaceutical GLP-1 drugs, which have become more accessible, affordable, and available in convenient formats like pills.

Competitive Pressure: The natural GLP-1 market has become significantly more competitive, with pharmaceutical options now being covered by insurance and priced lower. This has reduced the appeal of the company's MindBody GLP-1 system, impacting sales.

Inventory Challenges: The company is recognizing a reserve against a portion of its GLP-1 inventory due to the changing competitive landscape, indicating potential inventory obsolescence.

Cost Pressures: Gross profit percentage decreased due to a one-time allowance for inventory obsolescence and increased shipping and warehouse-related expenses. This reflects cost pressures on operations.

Decline in Active Accounts: The Americas region saw a 25.2% decrease in total active accounts, primarily from a reduction in the active customer base. The Asia Pacific and Europe regions also experienced a 6.5% decline in active accounts.

Operational Costs: Selling, general, and administrative expenses increased as a percentage of revenue due to lower sales volume and elevated event-related expenses.

Cash Flow Reduction: Cash generated from operations decreased significantly compared to the prior year, primarily due to the timing of incentive payments and other working capital changes.

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Guidance & Outlook

Revenue Expectations: LifeVantage expects revenue in the range of $185 million to $200 million for fiscal 2026.

Adjusted EBITDA: The company projects adjusted EBITDA of $15 million to $19 million for fiscal 2026.

Earnings Per Share: Adjusted earnings per share are expected to range from $0.60 to $0.80 per fully diluted share for fiscal 2026.

Competitive Dynamics in GLP-1 Market: The company acknowledges challenges in the GLP-1 market due to increased competition from pharmaceutical options, which are now more affordable and accessible. LifeVantage is evaluating options to respond to these dynamics and stabilize its GLP-1 business.

LoveBiome Integration and Product Launches: The integration of LoveBiome is expected to drive operational synergies and product diversification. Recent launches, including AXIO X and PhytoPower B, are anticipated to enhance engagement and consultant growth. Additional LoveBiome products are planned for launch in the coming months.

Technology Modernization: The Shopify partnership is on track for a pilot program, expected to improve e-commerce capabilities, conversion rates, and customer experience.

International Expansion: LifeVantage sees growth opportunities in key international markets, leveraging infrastructure from the LoveBiome integration to scale operations globally.

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Shareholder Return Plan

Dividends paid since fiscal 2024: Over $20 million returned to shareholders through dividends and share repurchases.

Quarterly dividend announcement: A quarterly cash dividend of $0.045 per share of common stock was announced, payable on March 16, 2026, to stockholders of record as of March 2, 2026.

Share repurchase since fiscal 2024: Over $20 million returned to shareholders through dividends and share repurchases.

New share repurchase program: A new $60 million share repurchase authorization was announced, replacing the prior program and allowing repurchases through December 31, 2027.

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Key Q&A

Q:What was the $3.7 million cash at closing for LoveBiome?

A:The $3.7 million cash at closing was the actual cash transaction price for LoveBiome. The deal was structured in two parts: a cash down payment of $3.7 million and a future earn-out based on revenue targets.

Q:What were the main factors contributing to the $10 million reduction in cash on the balance sheet?

A:The $10 million reduction was due to three main factors: the $3.7 million cash payment for LoveBiome, timing of accrued payables, and $3 million used for stock-based compensation withholding tax from employees vesting.

Q:What are the marketing plans and updates for MindBody during the weight loss season?

A:The marketing plans included a 20% discount promotion, weekly access to professional trainers and lifestyle experts through the Activeate90 event, a new app feature for tracking calories and activities, and a win-back campaign targeting previous MindBody users.

Q:How did LoveBiome contribute to revenue and consultant/customer numbers?

A:LoveBiome contributed $4 million in product revenue for the quarter. The number of active consultants from LoveBiome was not disclosed, but they have been integrated into the company.

Q:Why was there a decline in sales compared to previous years?

A:The decline was attributed to a reduction in the customer base and a modest decline in the consultant base. Consultants focused heavily on MindBody, leading to a loss of momentum for other products like Nrf2 and collagen. The addition of LoveBiome is expected to reengage consultants and drive growth.

Q:What is the role of Shopify in the company's strategy?

A:Shopify is being implemented to improve the e-commerce customer experience, increase conversion rates, and streamline internal processes. It will also enhance the consultant tool base and ensure the company stays at the forefront of e-commerce technology.

Q:Why does the company believe it can compete in the MindBody and GLP-1 space?

A:The company believes its natural solution, supported by clinical studies and science, offers a holistic alternative to synthetic drugs, appealing to consumers seeking prevention and natural options.

Q:What was the reason for the inventory charge related to MindBody?

A:The inventory charge was due to overestimating demand for MindBody after its initial launch. The company built up inventory based on early demand but later adjusted to more realistic demand levels, leading to a conservative reserve against the inventory.

Q:What is the expected revenue split for the second half of the year?

A:The company expects revenue to build in the third quarter and further increase in the fourth quarter, with Q4 likely having a higher proportion of revenue due to the integration of LoveBiome and continued product rollouts.

Q:Review of Unclear Management Responses

A:Management avoided providing specific details on the number of active consultants and customers from LoveBiome, stating that it might be addressed in the future. Additionally, while discussing the Shopify implementation, the response lacked specific examples of other direct sellers using Shopify, leaving some aspects of its impact unclear.

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Earnings Word Cloud

The most frequently occurring keywords in this quarter's earning call

LFVN Transcript

LifeVantage Corporation (LFVN) Q2 2026 Earnings Call Transcript

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LifeVantage Corporation (LFVN) Q1 2026 Earnings Call Transcript

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The earnings call reveals mixed signals: a slight revenue increase and positive net income growth, but declining margins and cash position raise concerns. The LoveBiome acquisition and technology partnership with Shopify offer growth potential, yet integration risks and competitive pressures persist. The Q&A session didn't reveal major red flags, but the market's reaction to integration progress remains uncertain. The dividend and share repurchase plan provide some support, but overall, the outlook remains balanced with no strong catalysts for significant stock movement.

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The earnings call presents mixed signals. Financial performance is positive with revenue growth, improved gross margins, and a strong cash position. However, there are concerns about profitability due to rising expenses and seasonality affecting revenue. The Q&A reveals management's reluctance to provide specific data on LoveBiome, adding uncertainty. The dividend and share repurchase are positive, but the lack of clear guidance on LoveBiome's contribution tempers enthusiasm. Overall, the sentiment is neutral due to balanced positive and negative factors, with potential for modest stock price movement.

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The earnings call summary presents mixed signals. While financial performance shows strong revenue growth and improved margins, concerns about international market decline and competition create uncertainty. Positive aspects include a raised revenue outlook and a stable cash position. However, unresolved supply chain issues and foreign currency impacts add risk. The Q&A highlights subscription strength but also international market uncertainty. The overall sentiment is neutral, as positive domestic performance is balanced by international challenges and market uncertainties.

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