Lifevantage Corporation Common Stock (Delaware) 2026 Q4 Earnings Call

Good afternoon, everyone, and welcome to LifeVantage Corporation's conference call to discuss results for the fourth quarter and full fiscal year 2026. On the call today from LifeVantage are Terrence Moorehead, President and Chief Executive Officer, and Carl Aure, Chief Financial Officer. By now, everyone should have access to the earnings release, which went out this afternoon at approximately 4:05 P.M. Eastern Time. If you have not received the 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 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-K 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 a 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, August 27th, 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 Moorehead, President and Chief Executive Officer of LifeVantage.

Thank you, Reed, and good afternoon, everyone. Before we begin, I want to take a moment to thank Michael Beindorff for his stewardship of the business and recognize our leadership team for their support during this transition. Michael stepped in to take on the leadership role, and on behalf of the board of directors, I want to thank him for his leadership. With that, I would like to say that it is truly a privilege to join you today as Chief Executive Officer of LifeVantage. Since joining the company, I have been immersed in the business, meeting employees, talking with our sales organization and customers, reviewing processes, evaluating capabilities, and assessing our position in the market. It has only been a few weeks, but my conviction about this company is stronger today than when I accepted the role.

What attracted me to LifeVantage was the company's differentiated science, solid balance sheet and economics, and significant untapped potential. Specifically, I believe the company's differentiated science is a critical linchpin to our future success. LifeVantage occupies a unique position in the health and wellness industry, focused on delivering a scientifically grounded platform that helps activate the body's natural biological processes. There are a lot of supplement companies on the market, but there aren't a lot of companies like LifeVantage, whose products actually help our bodies do what they're naturally built to do instead of just supplementing our diets. That's a meaningful and powerful distinction, and I believe it gives LifeVantage a real competitive advantage that we intend to leverage. As I look at LifeVantage through a more consumer-focused lens, I see an opportunity for us to build a larger, stronger, more relevant brand.

We have compelling science, differentiated products, strong margins, and are targeting a passionate group of consumers that are looking for new ways to improve their health every single day. Those are important building blocks that can create substantial value when paired with focused brand building, disciplined execution, and a consumer-centric growth strategy. My initial impression is that the opportunity in front of us is about unlocking the company's potential by reimagining key aspects of the business. We have an opportunity to revitalize our positioning, reframe how consumers think about our brand, strengthen product storylines, and create a greater understanding of the value of our products. Coming out of the blocks, our early focus will be centered around three priorities. First, strengthening the LifeVantage brand.

We have valuable science and differentiated products, but I believe we can do a much better job of communicating our story in a more clear, compelling, and consumer-friendly way. Consumers gravitate towards brands they trust and understand. Building that connection consistently and at scale will be a major focus. Our second priority focuses on building a more relevant consumer proposition. Here, our goal is to arm our sales force with more powerful tools, dramatically improve the consumer experience, and create a larger base of loyal consumers who incorporate LifeVantage in their lives on a daily basis. Our third and final priority will focus on improving operational excellence and profitability. One of the things that immediately stood out to me about LifeVantage were the economics of the business, particularly the gross margins that have historically approached 80% and could create strong opportunities.

The challenge will be to effectively translate those economics into sustainable growth and improved shareholder value. Now, I want to be thoughtful about expectations. It's still early in my tenure, so we're not going to be providing any formal guidance at this time. Over the next several months, we'll continue to assess the business and work closely with our leadership team to develop a comprehensive growth strategy supported by clear priorities, measurable objectives, and accountability throughout the organization. What I can tell you today is that I accepted this role because I believe this company has far greater potential than its current scale reflects. I believe in the potential of our brand, I believe in the quality of our products, and I believe in the people behind this business.

We have meaningful work ahead of us, but I'm confident that we have what it takes to create long-term value for our sales force, our employees, and our shareholders. I look forward to sharing more about our plans as the work progresses. With that, I'd like to turn the call over to our Chief Financial Officer, Carl Aure, so he can walk you through our financial results in more detail.

Carl? Thank you, Terrence, and good afternoon, everyone.

Let me walk you through our fourth quarter financial results. Please note that I will be discussing our non-GAAP adjusted results where applicable. You can refer to the GAAP to non-GAAP reconciliations in today's press release for additional details. For the fourth quarter of fiscal 2026, we delivered net revenue of $42.4 million, which was down 23.1% compared to $55.1 million in the fourth quarter of fiscal 2025. The decrease was primarily driven by downward pressure in the number of orders from our active account base and lower average order size, reflecting impacts from the broader macroeconomic environment as well as lower sales of our MindBody GLP-1 System, cycling the higher comparable fourth quarter of fiscal 2025 and partially offset by sales of LoveBiome, which we acquired in October of 2025.

Fourth quarter revenue was down 3.1% sequentially from the third quarter of fiscal 2026. Revenue in the Americas region decreased 24.8% to $32.7 million, and revenue in the Asia-Pacific and Europe region decreased 16.9% to $9.7 million. Subscription-based revenue remained strong, representing more than 75% of our total revenue in the fourth quarter of fiscal 2026, and our customer retention metrics improved year-over-year. We will continue to look for opportunities to improve our retention metrics for our most loyal customers. As Terrence mentioned earlier, we will also look to strengthen the LifeVantage brand and refine our consumer proposition to expand appeal to new consumers. This will be an area of focus for us as we move forward into fiscal 2027.

Our gross profit percentage for the fourth quarter was 78%, compared to 79.9% in the prior year period, reflecting a shift in product mix, higher inventory obsolescence expenses, and increases in shipping and related warehouse expenses. Commissions and incentive expense was 41.3% of revenue, compared to 42.1% a year ago, reflecting the timing and magnitude of our promotional incentive programs and changes to the sales mix between customers and independent consultants. Selling, general, and administrative expenses were 32.7% of revenue, compared to 33.9% in the prior year period. Adjusted non-GAAP SG&A was 32.3% of revenue, compared to 33.3% in the prior year period, reflecting decreases in variable employee compensation expenses and lower event-related expense. GAAP operating income was $1.7 million, compared to $2.1 million in the prior year period. Adjusted non-GAAP operating income was $1.8 million, compared to $2.5 million a year ago.

GAAP net income was $1.3 million, or $0.10 per diluted share, compared to $2 million or $0.15 per diluted share in the fourth quarter of fiscal 2025. Adjusted non-GAAP net income was $1.4 million or $0.11 per diluted share, compared to $2.3 million and $0.17 in the prior year period. We recorded income tax expense of just over $400,000 in the fourth quarter of fiscal 2026. Our overall effective tax rate for fiscal 2026 was approximately 16.4%. Adjusted EBITDA in the fourth quarter was $2.7 million or 6.5% of revenue, compared to $4.8 million or 8.7% of revenue in the same period a year ago. Our financial position remains strong with $14.9 million of cash and no debt at the end of fiscal 2026, compared to $20.2 million of cash a year ago.