LifeVantage Announces Second Quarter Fiscal Year 2013 Results

LifeVantage Announces Second Quarter Fiscal Year 2013 Results

  Second Quarter Net Revenue Increased 111% Over Prior Year Period to $53.4
                                   Million

  Second Quarter Operating Cash Flow Grew 16% Over Prior Year Period to $5.4
                                   Million

          Company Reiterates Full Year Fiscal 2013 Revenue Guidance

SALT LAKE CITY, Feb. 7, 2013 (GLOBE NEWSWIRE) -- LifeVantage Corporation
(Nasdaq:LFVN), a company dedicated to helping people achieve healthy living
through a combination of a compelling business opportunity and scientifically
validated products, including its patented dietary supplement Protandim^®, the
Nrf2 Synergizer^®, today reported financial results for the fiscal 2013 second
quarter and the six months ended December 31, 2012.

Fiscal 2013 Second Quarter Highlights Compared to the Same Period Last Year
Include:

  *Net revenue increased 111% to $53.4 million;
  *Operating cash flow grew 16% to $5.4 million;
  *Operating income was $487 thousand which included $5.9 million of expenses
    related to the voluntary product recall we announced in December;
  *Non-GAAP adjusted operating income was $6.4 million excluding one-time
    product recall related costs; and
  *As of December 31, 2012, cash and cash equivalents grew to $28.5 million.

Douglas C. Robinson, President and Chief Executive Officer of LifeVantage,
stated, "Our second quarter results reflect strong year-over-year improvements
in revenue and cash flow, underscoring the operational improvements
implemented over the past year. We believe the majority of the costs
associated with the voluntary recall are reflected in our second quarter
results. We now have put in place even more stringent measures to further
enhance our commitment to product safety. We also are experiencing continued
growth in our distributor and preferred customer base and believe that our
swift and transparent action toward the voluntary recall enabled us to build
upon our reputational capital."

Mr. Robinson continued, "We enter the third quarter with an expanded product
line after the introduction of Canine Health, and an expanded geographic
presence with the entry into Hong Kong. The introduction of our Canine Health
product increased our product portfolio to three scientifically formulated
products. This particular product is the only pet supplement specifically
formulated to reduce oxidative stress through Nrf2 activation in dogs. Our
expansion into Hong Kong is part of our global plan to grow our market
presence in countries where the scientifically backed healthy living message
resonates. We are now officially conducting business in Hong Kong by enrolling
Independent Distributors. Our recently appointed President and Managing
Director of Asia Pacific, David Toda, will oversee the day-to-day operations
in Hong Kong."

Fiscal 2013 Second Quarter Results

For the fiscal quarter ended December 31, 2012, the Company reported record
net revenue of $53.4 million, compared to $25.3 million for the same period in
fiscal 2012, an increase of 111%. On a sequential quarter basis, net revenue
increased from $52.9 million reported for the Company's 2013 first fiscal
quarter ended September 30, 2012.

The year-over-year sales increase was driven by significant increases in the
number of both active independent distributors and active preferred customers.
On a sequential basis, the increase in the numbers of active distributors and
active preferred customers were modest primarily due to soft seasonality
through the holiday season, the previously announced transition to
"on-the-ground" operations in Japan and corresponding necessity of complying
with certain regulatory administrative obligations and the second quarter
product recall. The number of active independent distributors, people who
purchased product in the prior three months for retail and personal
consumption, increased to approximately 55,000 as of December 31, 2012,
compared to approximately 27,000 active independent distributors as of
December 31, 2011. The number of active preferred customers, people who
purchased product in the prior three months for personal consumption only with
no intent to resell, increased to approximately 141,000 as of December 31,
2012, compared to approximately 65,000 active preferred customers as of
December 31, 2011.

Gross profit for the second fiscal quarter ended December 31, 2012 increased
to $38.8 million, compared to $21.6 million for the same period last year,
delivering a gross margin of 72.5%, compared to 85.4% in the prior year
period. The decrease was due to approximately $5.9 million of one-time recall
related costs and a $450 thousand charge related to a write-down of marketing
materials to comply with regulatory requirements. Adjusted gross profit,
excluding one-time product recall costs, for the quarter ended December 31,
2012 was $44.6 million delivering an adjusted gross margin of 83.6% compared
to $21.6 million and 85.4% for the prior year quarter.

Operating expenses for the second quarter of fiscal year 2013 increased to
$38.3 million, or 71.6% of revenue, from $17.3 million, or 68.5% of revenue,
for the prior year period. On a sequential quarter basis, operating expenses
as a percentage of revenue decreased compared to 72.2% in the first fiscal
quarter of 2012. The increase in the amount of operating expenses compared to
the prior year quarter is due primarily to increased sales commissions which
are a direct result of the Company's higher sales volume, as well as its
previously announced commitment to invest responsibly in infrastructure and
resources in order to prepare for healthy, future growth. These investments
include costs associated with the preparation for the launch of Canine Health,
office expansions in the U.S. and Japan, additional headcount, and spending on
sales promotions.

Operating income was $487 thousand for the second fiscal quarter, compared to
$4.3 million in the same period last year. Adjusted operating income,
excluding one-time recall related costs, was $6.4 million for the second
fiscal quarter, compared to $4.3 million in the same period last year.
Adjusted operating income margin was 12.0% in the second fiscal quarter,
compared to 16.9% in the same period last year and 13.1% in the first fiscal
quarter of 2013. The Company expects its operating income margin to improve
during the second half of fiscal 2013.

Income tax for the second quarter of fiscal 2013 was $262 thousand compared to
a $1.3 million benefit for the same period last year.

Net income for the second quarter of fiscal year 2013 was $209 thousand, or
$0.00 per diluted share, which includes $5.9 million of one-time costs related
to the voluntary product recall. This compares to net income in the second
quarter of fiscal year 2012 of $8.8 million, or $0.05 per diluted share which
included a tax benefit of $1.3 million and a favorable change in fair value of
derivative warrant liabilities of $3.1 million. Adjusted net income, excluding
one-time costs, for the quarter ended December 31, 2012 was $3.8 million or
$0.03 per diluted share.

Fiscal 2013 First Six Months Results

For the six months ended December 31, 2012, the Company reported net revenue
of $106.3 million, compared to $45.4 million for the same period in fiscal
2012, a 134% increase. Including the impact of $5.9 million of one-time recall
related costs, operating income was $7.3 million, compared to $7.7 million in
the same period last year; net income was $4.4 million or $0.03 per diluted
share, compared to $12.5 million or $0.07 per diluted share in the same period
last year. Excluding one-time product recall costs, adjusted operating income,
adjusted net income and adjusted diluted EPS for the six months ended December
31, 2012 were $13.3 million, $8.0 million and $0.06, respectively.

Balance Sheet & Liquidity

The Company's cash and cash equivalents at December 31, 2012 were $28.5
million, compared to $24.6 million at the end of fiscal 2012. The Company
generated $5.4 million of cash flow from operations in the second quarter of
fiscal year 2013, compared to $4.7 million for the same period last year.

Dave Colbert, the Company's Chief Financial Officer, commented, "We are
pleased with our overall financial position as we enter the second half of
fiscal 2013. During the second fiscal quarter, we continued our investment in
infrastructure and responsible growth as reflected in our increase in
resources and property plant and equipment. During this period we also
strengthened our product manufacturing by implementing enhanced processes and
multiple redundancies following the previously announced voluntary product
recall. We believe the majority of costs related to the recall has been
captured in our second fiscal quarter and we are focused on continuous
improvement and future revenue growth."

Fiscal Year 2013 Guidance

The Company anticipates continued strong growth in fiscal 2013 and is
reiterating its previously issued revenue guidance and revising profitability
guidance. LifeVantage expects to generate revenue for fiscal 2013 in the range
of $250 million to $260 million. Due to the one-time recall related costs
recorded in the second quarter of $5.9 million and anticipated higher
manufacturing related costs, the company expects a gross margin of
approximately 82% for the full year and to generate operating income in the
range of $27.1 million to $31.0 million compared to the previous range of
$34.5 million to $38.2 million. Operating margins are expected to be in the
range of 10.8% to 11.9% compared to the previous range of 13.8% to 14.7%. The
Company expects to generate earnings per diluted share in the range of $0.13
to $0.15, compared to the previous guidance of $0.18 to $0.20, based on an
effective tax rate of 39.6% and an estimated weighted average diluted shares
outstanding of 129 million.

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 (888) 713-4502 from the U.S. International callers can dial
(913) 312-0418.A telephone replay will be available approximately two hours
after the call concludes and will be available through Saturday, February 9,
2013, by dialing (877) 870-5176 from the U.S. and entering confirmation code
1086714, or (858) 384-5517 from international locations, and entering
confirmation code1086714.

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
approximately 30 days.

About LifeVantage Corporation

LifeVantage Corporation (Nasdaq:LFVN), a leader in Nrf2 science and the 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 and is headquartered in Salt Lake City, UT.

The LifeVantage Corporation logo is available at
http://www.globenewswire.com/newsroom/prs/?pkgid=11617

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 anticipated product expansion, international expansion, our revenue,
operating income, operating margins, earnings per share, cash flow from
operations and future investment and growth, as well as statements regarding
costs associated with our product recall and improvements made in our
manufacturing processes. 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 Company's inability to successfully
expand our operations in existing and other markets and thereafter manage our
growth; the Company's ability to strengthen its business in Japan; the
Company's reliance on third party suppliers and manufacturers; the Company's
ability to retain independent distributors or to attract new independent
distributors on an ongoing basis; the Company's ability to expand its product
offerings; violations of law or our procedures by the Company's independent
distributors; the potential for third-party and governmental actions involving
the Company's network marketing efforts; 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; the Company's ability to access raw
materials for its Products as it grows; risks associated with foreign currency
fluctuations; 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.

About Non-GAAP Financial Measures

We define Adjusted Gross Profit as Gross Profit as determined in accordance
with GAAP excluding certain costs associated with the product recall included
in GAAP cost of sales. We define Adjusted Gross Margin as gross margin as
determined in accordance with GAAP (gross profit as a percentage of sales,
net) excluding the costs associated with the product recall. We define
Adjusted Operating Income as Operating Income excluding certain costs
associated with the product recall. We define Adjusted Net Income as Net
Income excluding certain costs associated with the product recall and the
applicable tax impacts associated with these items. Adjusted EPS is calculated
based on Adjusted Net Income and the weighted average number of common and
potential common shares outstanding during the period. Adjusted Gross Profit,
Adjusted Gross Margin, Adjusted Operating Income, Adjusted Net Income and
Adjusted EPS may not be comparable to similarly titled measures reported by
other companies.

We are presenting Adjusted Gross Profit, Adjusted Gross Margin, Adjusted
Operating Income, Adjusted Net Income and Adjusted EPS because management
believes that excluding the product recall costs from the relevant GAAP
measures, when viewed with our results under GAAP and the accompanying
reconciliations provides useful information about our period-over-period
growth and profitability and provides additional information that is useful
for evaluating our operating performance. Each of Adjusted Gross Profit,
Adjusted Gross Margin, Adjusted Operating Income, Adjusted Net Income and
Adjusted EPS is presented solely as a supplemental disclosure because: (i) we
believe it is a useful tool for investors to assess the operating performance
of the business without the effect of these items; and (ii) we use Adjusted
Gross Profit, Adjusted Operating Income, Adjusted Net Income and Adjusted EPS
internally as a benchmark to evaluate our operating performance or compare our
performance to that of our competitors. The use of Adjusted Gross Profit,
Adjusted Gross Margin, Adjusted Operating Income, Adjusted Net Income and
Adjusted EPS has limitations and you should not consider these measures in
isolation from or as an alternative to the relevant GAAP measures, including
gross profit, gross margin, operating income, net income or net income per
diluted share prepared in accordance with GAAP, or as a measure of
profitability or liquidity.

The tables below set forth the reconciliation of Adjusted Gross Profit,
Adjusted Operating Income, Adjusted Net Income and Adjusted EPS, all of which
are non-GAAP financial measures, to Operating Income, Net Income, and Diluted
EPS, our most directly comparable financial measures presented in accordance
with GAAP.

LIFEVANTAGE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Unaudited)
                                                               
(In thousands, except per share data)          As of,
ASSETS                                         December 31, 2012 June 30, 2012
Current assets                                                  
Cash and cash equivalents                      $28,466         $24,648
Accounts receivable                            728               333
Inventory                                      9,552             11,353
Current deferred income tax asset              1,244             1,244
Prepaid expenses and deposits                  4,348             1,250
Total current assets                           44,338            38,828
                                                               
Long-term assets                                                
Property and equipment, net                    5,671             1,997
Intangible assets, net                         1,814             1,882
Long-term deferred income tax asset            1,480             1,479
Deposits                                       1,525             342
TOTAL ASSETS                                   $54,828         $44,528
LIABILITIES AND STOCKHOLDERS' EQUITY                           
Current liabilities                                             
Accounts payable                               $4,778          $3,615
Commissions payable                            6,235             5,631
Reserve for sales returns                      742               863
Accrued bonuses                                150               2,287
Income tax payable                             534              546
Other accrued expenses                         5,723             2,932
Customer deposits                              575               154
Total current liabilities                      18,737            16,028
                                                               
Long-term liabilities                                           
Other long-term liabilities                    1,058            217
Total liabilities                              19,795            16,245
                                                               
Commitments and contingencies                                   
Stockholders' equity                                           
Preferred stock - par value $.001,50,000
shares authorized; no shares issued or         --              --
outstanding
Common stock - par value $.001, 250,000 shares
authorized; 113,740 and 110,174 issued and     115              111
outstanding as of December 31, 2012 and June
30, 2012, respectively
Additional paid-in capital                     107,702          105,154
Accumulated deficit                            (72,826)         (76,961)
Currency translation adjustment                42               (21)
Total stockholders' equity                    35,033           28,283
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY     $54,828         $44,528




LIFEVANTAGE CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
(Unaudited)
                                                               
                          For the three months ended For the six months ended
                           December 31,               December 31,
                          2012          2011         2012         2011
(In thousands, except per                                       
share data)
Sales, net                 $53,438     $ 25,284     $106,297   $45,367
Cost of sales              8,799         3,680        16,606       6,636
Product recall costs       5,879         --         5,879        --
Gross profit               38,760        21,604       83,812       38,731
                                                               
Operating expenses:                                             
Sales and marketing        29,593        13,878       59,133       24,420
General and administrative 7,495         3,036        15,404       5,876
Research and development   742           312          1,257        546
Depreciation and           443           97           681          177
amortization
Total operating expenses   38,273        17,323       76,475       31,019
Operating income           487          4,281       7,337       7,712
                                                               
Other income (expense):                                         
Other expense              (16)         26          (1)         (13)
Change in fair value of
derivative warrant         --          3,142       --         3,947
liabilities
Total other income         (16)         3,168       (1)         3,934
(expense)
Net income before income   471          7,449       7,336       11,646
taxes
Income tax expense         (262)        1,309       (2,963)     837
Net income                 $209        $8,758     $4,373     $12,483
Net income per share,      $0.00      $0.09      $0.04      $0.13
basic
Net income per share,      $0.00      $0.05      $0.03      $0.07
diluted
                                                               
Weighted average shares,   113,449       99,409       112,158      99,184
basic
Weighted average shares,   127,131       121,231      126,046      121,003
diluted
                                                               
Other comprehensive                                             
income, net of tax:
Foreign currency           68           8           63          92
translation adjustment
Other comprehensive income $68         $8         $63        $92
Comprehensive income       $277        $8,766     $4,436     $12,575

                                                               
                                                               
                                                               
Reconciliation of GAAP
Gross Profit to Non-GAAP                                        
Adjusted Gross Profit:
                                                               
                          For the three months ended For the six months ended
                           December 31,               December 31,
                          2012          2011         2012         2011
(In thousands)                                                  
GAAP Gross Profit          $38,760     $21,604    $83,812    $38,731
                                                               
Adjustments:                                                    
Cost of sales associated   5,879        --         5,879       --
with product recall
Total adjustments          5,879        --         5,879       --
Non-GAAP Adjusted Gross    $44,639     $21,604    $89,691    $38,731
Profit
                                                               
Reconciliation of GAAP
Operating Income to                                             
Non-GAAP Adjusted
Operating Income:
                                                               
                                                               
                          For the three months ended For the six months ended
                           December 31,               December 31,
                          2012          2011         2012         2011
(In thousands)                                                  
GAAP Operating Income      $487        $4,282     $7,337     $7,712
                                                               
Adjustments:                                                    
Costs associated with                                           
product recall:
Cost of sales              5,879        --         5,879       --
General and administrative 71           --         71          --
Total adjustments          5,950        --         5,950       --
Non-GAAP Adjusted          $6,437      $4,282     $13,287    $7,712
Operating Income
                                                               
                                                               
Reconciliation of GAAP Net Income to Non-GAAP
Adjusted Net Income and related Adjusted Earnings Per             
Share:
                                                               
                          For the three months ended For the six months ended
                           December 31,               December 31,
                          2012          2011         2012         2011
(In thousands)                                                  
GAAP Net Income            $209        $8,759     $4,373     $12,483
                                                               
Adjustments:                                                    
Costs associated with                                           
product recall:
Cost of sales              5,879        --         5,879       --
General and administrative 71           --         71          --
Tax impact of adjustments  (2,358)      --         (2,358)     --
Total adjustments          3,592        --         3,592       --
Non-GAAP Adjusted Net      $3,801      $8,759     $7,965     $12,483
Income and Adjusted EPS
                                                               
Diluted Shares             127,131       121,231      126,046      121,003
                                                               
Non-GAAP Adjusted Diluted  $0.03       $0.05      $0.06      $0.07
EPS

CONTACT: Investor Relations Contact:
         Cindy England (801) 432-9036
         Director of Investor Relations
         -or-
         John Mills (310) 954-1105
         Senior Managing Director, ICR, LLC

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