LifeVantage Corporation (LFVN) Bundle
Understanding LifeVantage Corporation (LFVN) Revenue Streams
Understanding LifeVantage Corporation’s Revenue Streams
LifeVantage Corporation generates its revenue primarily through product sales, which include dietary supplements and skincare products. The company sells its products directly to customers and through an international network of independent consultants. Revenue is recognized upon shipment, when the title and risk of loss transfer to the customer.
Revenue Breakdown by Source
- Product Revenue: The main products include Protandim® dietary supplements, LifeVantage® Omega+, TrueScience® skincare line, and Liquid Collagen.
- Geographic Segments: The company disaggregates its revenue into two main regions: Americas and Asia/Pacific & Europe.
Year-over-Year Revenue Growth Rate
For the three months ended September 30, 2024, LifeVantage reported net revenue of $47.2 million, compared to $51.4 million for the same period in 2023, reflecting a decrease of 8.3%.
| Period | Revenue (in millions) | Year-over-Year Change |
|---|---|---|
| Q3 2024 | $47.2 | -8.3% |
| Q3 2023 | $51.4 | N/A |
Contribution of Different Business Segments to Overall Revenue
The breakdown of revenue by geographic regions for the three months ended September 30, 2024, is as follows:
| Region | Revenue (in thousands) | Year-over-Year Change |
|---|---|---|
| Americas | $36,892 | -4.2% |
| Asia/Pacific & Europe | $10,322 | -19.7% |
In the Americas, revenue decreased by $1.6 million or 4.2% compared to the previous year, while the Asia/Pacific & Europe region saw a more significant decline of $2.5 million or 19.7%.
Analysis of Significant Changes in Revenue Streams
During the same period, revenue related to the TrueScience® Liquid Collagen product showed a slight decline, totaling approximately $9.7 million compared to $10.0 million in the prior year. The total Active Accounts decreased by 10.2%, highlighting a reduction in customer engagement and sales activity.
Additionally, foreign currency fluctuations negatively impacted revenue by approximately $0.2 million, or 0.4%, during the three months ended September 30, 2024.
A Deep Dive into LifeVantage Corporation (LFVN) Profitability
A Deep Dive into LifeVantage Corporation's Profitability
Gross Profit Margin: For the three months ended September 30, 2024, the gross profit was $37.7 million on revenues of $47.2 million, resulting in a gross profit margin of 79.9%. In comparison, for the same period in 2023, the gross profit was $41.2 million with revenues of $51.4 million, leading to a gross profit margin of 80.2%.
Operating Profit Margin: Operating income for the third quarter of 2024 was $2.57 million, resulting in an operating profit margin of 5.4%. This is an increase from $749,000 in the same quarter of the previous year, which reflected an operating profit margin of 1.5%.
Net Profit Margin: The net income for the three months ended September 30, 2024, was $1.83 million, translating to a net profit margin of 3.9%. This compares to a net income of $629,000 in 2023, which resulted in a net profit margin of 1.2%.
Trends in Profitability Over Time
Over the past year, the company has shown a positive trend in profitability metrics. The gross profit margin decreased slightly from 80.2% to 79.9%, while the operating margin improved significantly from 1.5% to 5.4%, and the net profit margin increased from 1.2% to 3.9%.
Comparison of Profitability Ratios with Industry Averages
Industry averages for similar companies typically show gross profit margins around 75%, operating margins of 5% to 10%, and net profit margins of 3% to 5%. LifeVantage's gross profit margin of 79.9% is above the industry average, indicating strong pricing power and cost management. The operating margin is at the lower end of the industry range, while the net profit margin is competitive.
Analysis of Operational Efficiency
The company's operating expenses for the three months ended September 30, 2024, totaled $35.2 million, which includes:
- Commissions and incentives: $20.3 million (43.0% of revenue)
- Selling, general and administrative expenses: $14.8 million (31.4% of revenue)
In the previous year, operating expenses amounted to $40.4 million, which included:
- Commissions and incentives: $22.5 million (43.8% of revenue)
- Selling, general and administrative expenses: $18.0 million (35.0% of revenue)
The reduction in operating expenses as a percentage of revenue indicates improved operational efficiency. The decrease in selling, general and administrative expenses from 35.0% to 31.4% suggests effective cost management strategies.
| Metric | Q3 2024 | Q3 2023 | Change |
|---|---|---|---|
| Gross Profit | $37.7 million | $41.2 million | Decrease of $3.5 million |
| Gross Profit Margin | 79.9% | 80.2% | Decrease of 0.3% |
| Operating Income | $2.57 million | $0.75 million | Increase of $1.82 million |
| Operating Profit Margin | 5.4% | 1.5% | Increase of 3.9% |
| Net Income | $1.83 million | $0.63 million | Increase of $1.20 million |
| Net Profit Margin | 3.9% | 1.2% | Increase of 2.7% |
Debt vs. Equity: How LifeVantage Corporation (LFVN) Finances Its Growth
Debt vs. Equity: How LifeVantage Corporation Finances Its Growth
Overview of the Company's Debt Levels
As of September 30, 2024, LifeVantage Corporation reported total liabilities of $33.8 million, which includes both current and long-term obligations. The breakdown of the liabilities is as follows:
| Liability Type | Amount (in thousands) |
|---|---|
| Current Liabilities | $22,072 |
| Long-term Lease Liabilities | $11,466 |
| Other Long-term Liabilities | $225 |
| Total Liabilities | $33,763 |
The company has a revolving line of credit that does not exceed $5 million, with no balance outstanding as of September 30, 2024.
Debt-to-Equity Ratio and Comparison to Industry Standards
The total stockholders’ equity as of September 30, 2024, was reported at $27.7 million. This results in a debt-to-equity ratio calculated as follows:
Debt-to-Equity Ratio = Total Liabilities / Total Stockholders’ Equity
Debt-to-Equity Ratio = $33.8 million / $27.7 million = 1.22
This ratio indicates that the company has 1.22 times more debt than equity, which is relatively higher than the industry average of approximately 0.75 for companies in the nutraceutical sector.
Recent Debt Issuances, Credit Ratings, or Refinancing Activity
On April 12, 2024, LifeVantage entered into a loan agreement with Bank of America, establishing a revolving line of credit amounting to $5 million. The effective interest rate on this facility stands at 6.96%. The company has maintained compliance with its financial covenants under this credit facility as of September 30, 2024.
How the Company Balances Between Debt Financing and Equity Funding
LifeVantage has utilized a mix of debt and equity financing to support its growth initiatives. The company has historically relied on cash flow from operations to fund its activities but has also engaged in stock repurchases. For the three months ended September 30, 2024, the company repurchased shares at a total cost of $1.1 million, reflecting its strategy to manage equity effectively.
Furthermore, the company has filed a shelf registration statement permitting it to offer up to $75 million of various securities, enhancing its ability to raise equity as needed.
Assessing LifeVantage Corporation (LFVN) Liquidity
Assessing LifeVantage Corporation's Liquidity
Current Ratio: As of September 30, 2024, the current ratio was calculated as follows:
Current Assets: $30.7 million
Current Liabilities: $14.0 million
Current Ratio = Current Assets / Current Liabilities = 2.19
Quick Ratio: The quick ratio as of September 30, 2024 was:
Quick Assets (Current Assets - Inventory): $30.7 million - $16.9 million = $13.8 million
Quick Ratio = Quick Assets / Current Liabilities = 0.99
Analysis of Working Capital Trends
Working Capital as of September 30, 2024:
Working Capital = Current Assets - Current Liabilities = $30.7 million - $14.0 million = $16.7 million
Comparison with Previous Quarter (June 30, 2024): Working Capital was $15.3 million, indicating an increase of $1.4 million.
Cash Flow Statements Overview
| Cash Flow Activities | Q3 2024 (in thousands) | Q3 2023 (in thousands) |
|---|---|---|
| Net Cash Provided by Operating Activities | ($0.6 million) | $4.8 million |
| Net Cash Used in Investing Activities | ($0.3 million) | ($1.1 million) |
| Net Cash Used in Financing Activities | ($1.8 million) | ($6.7 million) |
| Total Cash and Cash Equivalents at End of Period | $14.6 million | $18.4 million |
Potential Liquidity Concerns or Strengths
As of September 30, 2024, available liquidity was $14.6 million, a decrease from $16.9 million on June 30, 2024. The liquidity position indicates that the company has access to cash and cash equivalents to meet short-term obligations.
Cash Flow from Operating Activities showed a net cash used of $0.6 million in Q3 2024 compared to a net cash provided of $4.8 million in Q3 2023, highlighting a significant decrease in cash generation from operations. This may raise concerns regarding operational efficiency and revenue generation moving forward.
Significant changes in cash flows, as seen from the decrease in cash provided by operating activities and an increase in cash used in financing activities, could indicate potential liquidity pressures if not addressed effectively.
Furthermore, the company has a credit facility providing a revolving line of credit of up to $5.0 million, which can be utilized if liquidity challenges arise .
Is LifeVantage Corporation (LFVN) Overvalued or Undervalued?
Valuation Analysis
To determine if LifeVantage Corporation is overvalued or undervalued, we will examine key financial ratios, stock price trends, dividend yields, and analyst consensus.
Price-to-Earnings (P/E) Ratio
The current P/E ratio for LifeVantage Corporation is 50.0 based on a stock price of approximately $7.00 and earnings per share (EPS) of $0.14 for the latest quarter ending September 30, 2024.
Price-to-Book (P/B) Ratio
The P/B ratio is calculated as the stock price divided by the book value per share. The book value per share is $2.22, leading to a P/B ratio of 3.15.
Enterprise Value-to-EBITDA (EV/EBITDA) Ratio
The enterprise value (EV) is approximately $61.46 million and EBITDA for the most recent quarter is $3.0 million, resulting in an EV/EBITDA ratio of approximately 20.5.
Stock Price Trends
Over the last 12 months, the stock price has fluctuated as follows:
| Month | Stock Price ($) |
|---|---|
| September 2023 | 5.50 |
| December 2023 | 6.50 |
| March 2024 | 6.80 |
| June 2024 | 7.00 |
| September 2024 | 7.00 |
Dividend Yield and Payout Ratios
The quarterly cash dividend declared in August 2024 was $0.04 per share, with a total payout of $0.5 million for the quarter. The dividend yield based on the current stock price is approximately 0.57%.
Analyst Consensus
Analyst consensus on the stock valuation as of October 2024 is as follows:
- Buy: 2 Analysts
- Hold: 5 Analysts
- Sell: 1 Analyst
Overall, the majority of analysts suggest a hold position, indicating mixed sentiments regarding the current valuation based on the company's performance and market conditions.
Key Risks Facing LifeVantage Corporation (LFVN)
Key Risks Facing LifeVantage Corporation
The financial health of LifeVantage Corporation is influenced by a variety of internal and external risk factors that investors should consider. These risks can range from industry competition and regulatory changes to market conditions and operational challenges.
Industry Competition
The direct selling industry is characterized by intense competition, with numerous companies vying for market share. LifeVantage faces competition from both established brands and new entrants, which can impact pricing strategies and market positioning. The company's revenue for the three months ended September 30, 2024, was $47.2 million, a decline of 8.1% from $51.4 million in the same period in 2023.
Regulatory Changes
Regulatory scrutiny is a significant risk, particularly in the direct selling sector, where compliance with various laws and regulations is critical. Any changes to regulations governing direct selling practices could impact operational efficiency and profitability. The company has highlighted risks related to potential non-compliance with direct selling regulations, which could result in legal penalties and reputational damage.
Market Conditions
Market conditions, including economic downturns and shifts in consumer spending habits, can adversely affect sales. The company's revenue in the Asia/Pacific & Europe region decreased by $2.5 million, or 19.7%, for the three months ended September 30, 2024, compared to the prior year. Additionally, fluctuations in foreign currency exchange rates have negatively impacted revenue by approximately $0.2 million, or 0.4%, during the same period.
Operational Risks
Operational risks include supply chain disruptions, inventory management challenges, and technology failures. The company reported inventory levels of $16.9 million as of September 30, 2024, which reflects a strategic focus on managing product availability and costs. Furthermore, disruptions in IT systems pose risks to operational continuity, especially in light of increasing cybersecurity threats.
Financial Risks
Financial risks are prominent, particularly concerning the company's debt obligations. As of September 30, 2024, total liabilities amounted to $33.8 million, with a revolving line of credit of $5 million that could be drawn upon if necessary. The company is subject to financial covenants, and any breach could lead to increased borrowing costs or restricted access to capital.
Strategic Risks
Strategic risks arise from the company's ability to manage existing markets and expand into new ones. For instance, the company reported a 10.2% decrease in total active accounts, highlighting challenges in customer retention and consultant engagement. Additionally, the launch of new products must align with market needs to ensure customer acceptance and drive revenue growth.
Mitigation Strategies
To mitigate these risks, the company has implemented several strategies, including enhancing compliance programs, optimizing inventory management, and focusing on customer engagement initiatives. The company maintains liquidity of $14.6 million as of September 30, 2024, which is crucial for navigating operational challenges.
| Risk Factor | Description | Financial Impact |
|---|---|---|
| Industry Competition | Intense competition affecting pricing and market share. | Revenue decreased by 8.1% YoY. |
| Regulatory Changes | Compliance risks in direct selling regulations. | Potential legal penalties. |
| Market Conditions | Economic downturns impacting consumer spending. | Revenue in Asia/Pacific decreased by 19.7%. |
| Operational Risks | Supply chain and inventory management challenges. | Inventory levels at $16.9 million. |
| Financial Risks | Debt obligations and financial covenants. | Total liabilities of $33.8 million. |
| Strategic Risks | Challenges in market expansion and product acceptance. | 10.2% decrease in active accounts. |
Future Growth Prospects for LifeVantage Corporation (LFVN)
Future Growth Prospects for LifeVantage Corporation
Analysis of Key Growth Drivers
The company is focused on several key growth drivers, including product innovations and market expansions. In October 2023, the company relaunched its TrueScience® Skin Care line, featuring new branding and improved formulas. This line includes products such as the TrueClean Refining Cleanser and TrueHydrate Brightening Moisturizer. Additionally, the company launched the MindBody GLP-1 System™ in October 2024, aimed at helping individuals manage weight through a dual-product solution. These initiatives are expected to enhance product offerings and drive consumer interest.
Future Revenue Growth Projections and Earnings Estimates
For the three months ended September 30, 2024, the company reported net revenue of $47.2 million, a decrease from $51.4 million in the same period in 2023. The decline in revenue can be attributed to a 4.2% decrease in the Americas region and a 19.7% decrease in Asia/Pacific & Europe. Despite these declines, the company anticipates a recovery in revenue growth as new products are introduced and marketing efforts are intensified.
Strategic Initiatives and Partnerships
The company has implemented the Evolve Compensation Plan, which was launched in multiple markets including the United States, Japan, and Europe. This plan is designed to incentivize independent consultants and is expected to improve recruitment and retention rates. Furthermore, the company has filed a shelf registration statement allowing it to offer up to $75 million of various securities, providing flexibility for future capital raises to fund growth initiatives .
Competitive Advantages
LifeVantage benefits from a robust direct selling model that leverages independent consultants. As of September 30, 2024, the company had a total of 123,000 active accounts, a decrease from 137,000 in the prior year. The shift in product mix and the introduction of new products are expected to bolster average order sizes and attract new customers .
| Region | Revenue (Q3 2024) | Revenue (Q3 2023) | % Change |
|---|---|---|---|
| Americas | $36.9 million | $38.5 million | -4.2% |
| Asia/Pacific & Europe | $10.3 million | $12.9 million | -19.7% |
| Total | $47.2 million | $51.4 million | -8.1% |
Investment in Future Growth
The company continues to invest in research and development to enhance its product pipeline, as evidenced by the recent launches and rebranding efforts. The strategic focus on enhancing product offerings, coupled with a commitment to expanding market reach, positions the company for potential revenue growth moving forward .
LifeVantage Corporation (LFVN) DCF Excel Template
5-Year Financial Model
40+ Charts & Metrics
DCF & Multiple Valuation
Free Email Support
Article updated on 8 Nov 2024
Resources:
- LifeVantage Corporation (LFVN) Financial Statements – Access the full quarterly financial statements for Q1 2025 to get an in-depth view of LifeVantage Corporation (LFVN)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View LifeVantage Corporation (LFVN)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.