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| 8-K - FORM 8-K - Lifevantage Corp | d301679d8k.htm |
Exhibit 99.1
LifeVantage Announces Record Second Quarter Fiscal Year 2012
Net Revenue Increases 239% Over Prior Year Period to $25.3 Million
Operating Income Improves to a Record $4.3 Million
Company Raises Full Year Fiscal 2012 Revenue and Operating Margin Guidance
Salt Lake City, UT, February 14, 2012, LifeVantage Corporation (OTCBB: LFVN), maker of Protandim®, the Nrf2 Synergizer™ patented dietary supplement, today reported financial results for the second quarter and six months ended December 31, 2011.
Fiscal 2012 Second Quarter Highlights Include:
| • | Net revenue increased 239% to $25.3 million compared to same quarter last year; |
| • | Operating margin doubled to 16.9% compared to 8.2% in the same quarter last year; |
| • | Operating income grew 603% compared to the same quarter last year to $4.3 million; |
| • | Cash and cash equivalents were $13.5 million; |
| • | Four new directors were elected to the Board, adding significant leadership experience; |
| • | Received approval from warrant holders for and completed a tender offer to modify certain outstanding warrants such that the Company will no longer account for these warrants as a derivative liability, which the Company believes will enable its financials to more closely reflect operating performance. |
Fiscal 2012 Second Quarter Results
For the second fiscal quarter ended December 31, 2011, the Company reported record net revenue of $25.3 million, compared to $7.5 million for the same period in fiscal 2011, an increase of 239%. On a sequential quarter basis, net revenue increased 26% from the $20.1 million reported for the Company’s 2012 first fiscal quarter ended September 30, 2011.
Gross profit for the quarter ended December 31, 2011 increased to $21.6 million, compared to $6.3 million for the same period last year, delivering a gross margin of 85.4%, compared to 84.0% for the same period last year.
Operating expenses for the second fiscal quarter decreased as a percent of revenue to 68.5%, or $17.3 million, compared to 75.9% of revenue, or $5.7 million, for the same period last year. On a sequential quarter basis, operating expenses as a percentage of revenue were relatively flat. The gross increase in the amount of operating expenses is due primarily to increased sales commissions which are a direct result of the Company’s higher sales volume. This increase also reflects greater investment in personnel and infrastructure to position the Company for future growth.
Operating income improved to $4.3 million for the second fiscal quarter, compared to $0.6 million in the same period last year and $3.4 million in the first fiscal quarter. This was the Company’s sixth consecutive quarter of achieving operating income. Operating income margin was 16.9% in the second fiscal quarter, compared to 8.2% in the same period last year and 17.1% in the first fiscal quarter.
Fiscal 2012 First Six Months Results
For the six months ended December 31, 2011, the Company reported record net revenue of $45.4 million, compared to $13.9 million for the same period in fiscal 2011, a 226% increase. Operating income increased to $7.7 million, compared to $1.0 million in the same period last year.
Douglas C. Robinson, -President and Chief Executive Officer of LifeVantage, stated, “Our record second fiscal quarter revenue and operating income, combined with the doubling of our operating margins, underscore our ability to achieve leverage in our business while making strategic investments. We plan to continue to strengthen our infrastructure by adding headcount for all areas of our business and increasing our marketing investments as we build the necessary platform to continue our profitable organic growth.”
“As awareness and understanding about Protandim and LifeVantage TrueScience® Anti-Aging Cream continues to expand in consumer markets as well as among medical professionals, we believe that our business is positioned for continued long-term growth. We are seeing a growing number of distributors join our team, as evidenced by record attendance at our recent quarterly distributor convention. We look forward to building upon this positive momentum and delivering another record year for LifeVantage in fiscal 2012.”
Mr. Robinson concluded, “Reflecting our commitment to continue enhancing our corporate leadership, our shareholders recently elected four new members of the Board of Directors. These directors add diverse and deep leadership experience to the Board and are a strong addition to our Company. We are very excited about our continued outlook for fiscal 2012 and look forward to continuing to achieve long-term growth and profitability while helping people around the world improve their health and wellness through the science of Protandim.”
Balance Sheet & Liquidity
The Company improved its balance sheet in the second fiscal quarter. The Company’s cash balance at December 31, 2011 was $13.5 million, an increase from $6.4 million at year end fiscal 2011, due to strong revenue growth and operating profits. The Company generated $4.7 million of cash flow from operations in the second quarter of fiscal 2012, compared to $0.5 million in the second quarter of fiscal 2011.
On December 29, 2011, the Company received approval from warrant holders for and completed its tender offer to modify certain outstanding warrants. As previously announced, LifeVantage filed a tender offer document with the SEC and initiated a tender offer for the purpose of amending certain of its warrants to remove the price-based anti-dilution provision contained in those warrants and to extend the period during which those warrants may be exercised by 30 days. As of December 29, 2011, the Company received the requisite approvals such that all of 12.7 million warrants covered by the tender offer were amended. As a result, the Company will no longer account for these warrants as a derivative liability as currently required under U.S. GAAP.
With the warrant modification and the expiration of certain other warrants in March and April 2012, the Company anticipates removing all derivative warrant liabilities from its balance sheet and eliminating the quarterly changes in fair value of these warrants from its income statement.
Carrie McQueen, Chief Financial Officer, commented, “We are pleased with our continued progress in improving our balance sheet and the overall financial position of LifeVantage. To further improve the strength of our financial statements, we have eliminated over $19 million of long-term derivative liabilities this quarter, dramatically reduced our interest expense, and successfully modified certain outstanding warrants so we will no longer account for these warrants as a derivative liability which enables our financial statements to more closely reflect the Company’s operating performance.”
Guidance
The Company is raising its full year guidance for fiscal 2012. LifeVantage expects to generate revenue for the fiscal year in a range of $105 million to $115 million, compared to the previous range of $95 million to $105 million. Further, the Company expects to generate operating income for the fiscal year in a range of $13.7 million to $17.3 million, and an operating margin of 13% to 15%. The previous range of operating income was $11.4 million to $14.7 million, and an operating margin of 12% to 14%.
Conference Call Information
The Company will hold an investor conference call today at 2:30 p.m. Mountain time (4:30 p.m. Eastern time). Investors interested in participating in the live call can dial (877) 604-9665 from the U.S. International callers can dial (719) 325-4886. A telephone replay will be available approximately two hours after the call concludes and will be available through Thursday, February 16, 2012, by dialing (877) 870-5176 from the U.S., or (858) 384-5517 from international locations, and entering confirmation code 2407254.
There also will be a simultaneous, live webcast available on the Investor Relations section of the Company’s web site at http://investor.lifevantage.com/events.cfm The webcast will be archived for 30 days.
About LifeVantage Corporation
LifeVantage, (OTCBB:LFVN), maker of Protandim®, the Nrf2 Synergizer™ patented dietary supplement, is a science based nutraceutical company. LifeVantage is dedicated to visionary science that looks to transform wellness and anti-aging internally and externally with products that dramatically reduce oxidative stress at the cellular level. The Company was founded in 2003 with corporate headquarters in Salt Lake City, UT and operations in San Diego, CA. For more information, visit www.LifeVantage.com.
Forward Looking Statements
This document contains forward-looking statements made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Words and expressions reflecting optimism, satisfaction or disappointment with current prospects, as well as words such as “believe,” “hopes,” “intends,” “estimates,” “expects,” “projects,” “plans,” “anticipates,” “look forward to” and variations thereof, identify forward-looking statements, but their absence does not mean that a statement is not forward-looking. Examples of forward-looking statements include, but are not limited to, statements we make regarding our anticipated revenue, operating profitability, cash flow from operations and future investment and growth. Such forward-looking statements are not guarantees of performance and the Company’s actual results could differ materially from those contained in such statements. These forward-looking statements are based on the Company’s current expectations and beliefs concerning future events affecting the Company and involve known and unknown
risks and uncertainties that may cause the Company’s actual results or outcomes to be materially different from those anticipated and discussed herein. These risks and uncertainties include, among others, the potential failure or unintended negative consequences of the implementation of the Company’s network marketing sales channel; the Company’s ability to retain independent distributors or to attract new independent distributors on an ongoing basis; the potential for third party and governmental actions involving the Company’s network marketing sales channel; the potential for product liability claims against the Company; the risk that government regulators and regulations could adversely affect the Company’s business; future laws or regulations may hinder or prohibit the production or sale of the Company’s existing product and any future products; unfavorable publicity could materially hurt the Company’s business; and the Company’s ability to protect its intellectual property rights and the value of its product. These and other risk factors are discussed in greater detail in the Company’s Annual Report on Form 10-K and its Quarterly Report on Form 10-Q under the caption “Risk Factors,” and in other documents filed by the Company from time to time with the Securities and Exchange Commission. The Company cautions investors not to place undue reliance on the forward-looking statements contained in this document. All forward-looking statements are based on information currently available to the Company on the date hereof, and the Company undertakes no obligation to revise or update these forward-looking statements to reflect events or circumstances after the date of this document, except as required by law.
Investor Relations Contact:
Cindy England (801) 432-9036
Director of Investor Relations
-or-
John Mills (310) 954-1105
Senior Managing Director, ICR, LLC
LIFEVANTAGE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
| As of, | ||||||||
| December 31, 2011 | June 30, 2011 | |||||||
| ASSETS |
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| Current assets |
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| Cash and cash equivalents |
$ | 13,460,740 | $ | 6,370,974 | ||||
| Marketable securities, available for sale |
— | 350,000 | ||||||
| Accounts receivable, net |
759,098 | 941,802 | ||||||
| Inventory |
3,034,313 | 2,124,663 | ||||||
| Current portion of deferred income taxes |
2,188,494 | — | ||||||
| Prepaid expenses and deposits |
1,437,694 | 487,812 | ||||||
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| Total current assets |
20,880,339 | 10,275,251 | ||||||
| Long-term assets |
||||||||
| Property and equipment, net |
1,150,080 | 227,811 | ||||||
| Intangible assets, net |
1,930,987 | 1,963,277 | ||||||
| Deferred income taxes, less current portion |
613,506 | — | ||||||
| Deposits |
92,173 | 32,173 | ||||||
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| TOTAL ASSETS |
$ | 24,667,085 | $ | 12,498,512 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
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| Current liabilities |
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| Accounts payable |
1,678,760 | 799,210 | ||||||
| Commission payable |
3,025,013 | 1,999,969 | ||||||
| Reserve for sales returns |
905,441 | 435,135 | ||||||
| Income tax payable |
136,310 | 36,000 | ||||||
| Other accrued expenses |
2,867,789 | 2,206,222 | ||||||
| Customer deposits |
200,250 | 33,893 | ||||||
| Revolving line of credit and accrued interest |
433,984 | 433,984 | ||||||
| Short-term derivative liabilities |
6,056,555 | 7,435,883 | ||||||
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| Total current liabilities |
15,304,066 | 13,380,296 | ||||||
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| Long-term liabilities |
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| Deferred rent |
14,510 | 21,017 | ||||||
| Capital lease |
15,979 | — | ||||||
| Derivative liabilities |
— | 19,905,401 | ||||||
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| Total liabilities |
15,334,555 | 33,306,714 | ||||||
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| Commitments and contingencies |
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| Stockholders’ equity (deficit) |
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| Preferred stock—par value $0.001, 50,000,000 shares authorized; no shares issued or outstanding |
— | — | ||||||
| Common stock—par value $0.001, 250,000,000 shares authorized; 99,838,650 and 98,794,499 issued and outstanding as of December 31, 2011 and June 30, 2011,respectively |
100,289 | 98,795 | ||||||
| Additional paid-in capital |
85,821,435 | 67,606,293 | ||||||
| Accumulated deficit |
(76,621,874 | ) | (88,453,607 | ) | ||||
| Currency translation adjustment |
32,680 | (59,683 | ) | |||||
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| Total stockholders’ equity (deficit) |
9,332,530 | (20,808,202 | ) | |||||
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| TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) |
$ | 24,667,085 | $ | 12,498,512 | ||||
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The Notes included in Form 10-Q for the period ended December 31, 2011 are an integral part of these condensed consolidated statements.
LIFEVANTAGE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
| For the three months ended December 31, |
For the six months ended December 31, |
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| 2011 | 2010 | 2011 | 2010 | |||||||||||||
| Sales, net |
$ | 25,284,058 | $ | 7,460,089 | $ | 45,367,357 | $ | 13,903,438 | ||||||||
| Cost of sales |
3,679,653 | 1,191,534 | 6,636,432 | 2,211,669 | ||||||||||||
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| Gross profit |
21,604,405 | 6,268,555 | 38,730,925 | 11,691,769 | ||||||||||||
| Operating expenses: |
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| Sales and marketing |
13,878,045 | 4,020,603 | 24,420,599 | 7,431,446 | ||||||||||||
| General and administrative |
3,035,868 | 1,496,069 | 5,875,630 | 3,003,162 | ||||||||||||
| Research and development |
311,796 | 89,717 | 546,352 | 199,510 | ||||||||||||
| Depreciation and amortization |
96,822 | 53,184 | 176,677 | 103,900 | ||||||||||||
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| Total operating expenses |
17,322,531 | 5,659,573 | 31,019,258 | 10,738,018 | ||||||||||||
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| Operating income |
4,281,874 | 608,982 | 7,711,667 | 953,751 | ||||||||||||
| Other income and (expense): |
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| Interest income (expense) |
26,052 | (544,282 | ) | (12,740 | ) | (2,008,905 | ) | |||||||||
| Change in fair value of derivative warrant liabilities |
3,141,654 | 5,477,924 | 3,946,420 | 7,312,971 | ||||||||||||
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| Total other income |
3,167,706 | 4,933,642 | 3,933,680 | 5,304,066 | ||||||||||||
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| Net income before income taxes |
7,449,580 | 5,542,624 | 11,645,347 | 6,257,817 | ||||||||||||
| Income tax benefit (expense) |
1,309,059 | (95,000 | ) | 837,459 | (95,000 | ) | ||||||||||
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| Net income |
$ | 8,758,639 | $ | 5,447,624 | $ | 12,482,806 | $ | 6,162,817 | ||||||||
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| Net income per share, basic |
$ | 0.09 | $ | 0.08 | $ | 0.13 | $ | 0.09 | ||||||||
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| Net income per share, diluted |
$ | 0.05 | $ | 0.00 | $ | 0.07 | ($ | 0.01 | ) | |||||||
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| Weighted average shares, basic |
99,409,267 | 71,063,750 | 99,184,281 | 67,374,094 | ||||||||||||
| Weighted average shares, diluted |
121,231,366 | 90,969,984 | 121,002,855 | 87,837,962 | ||||||||||||
| Currency translation adjustment |
8,247 | 6,862 | 92,363 | (7,466 | ) | |||||||||||
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| Other comprehensive income |
$ | 8,766,886 | $ | 5,454,486 | $ | 12,575,169 | $ | 6,155,351 | ||||||||
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The Notes included in Form 10-Q for the period ended December 31, 2011 are an integral part of these condensed consolidated statements.