September 28, 2023
Network marketing company LifeVantage is facing a proxy fight over control of its board as the company’s revenues have stagnated following the pandemic.
The multilevel marketing company that sells an array of dietary supplements has seen revenues fall from a high of $230 million to $206 million for its most recent annual report. That represents a return to annual revenue levels not seen since about 2016.
LifeVantage, based in Salt Lake City, is an MLM that was founded on a product called Protandim. It is mixture of turmeric (Curcuma longa), green tea (Camellia sinensis), bacopa (Bacopa monnieri), milk thistle (Silybum marianum) and ashwaganda (Withania somnifera). The company claims it lowers oxidative stress in the body via something called the Nrf2 pathway.
The product was at first sold via a conventional distribution platform, but revenues and growth were disappointing.
Switch to MLM model brought success
The LifeVantage website claims that after the company converted to the MLM model around 2008, it quickly reached “a quarter billion dollars” in revenue. The company was buoyed at that time by a high-profile partnership with Utah superstar Donny Osmond.
Annual revenue has been up and down since then. The company went public in late 2013 with annual revenues of about $183 million in the preceding fiscal year, according to the ranking maintained by industry publication Direct Selling News.
Since then, the stock price has been on a bumpy ride. The all-time high of more than $17 a share was achieved in the weeks after the company’s IPO hit the market. The recent 52-week high of more than $16 a share came in early 2020, and the company’s shares fell to as little as $3.34 in April of 2023.
Challengers for board seats
Restive shareholders have launched a proxy fight to gain seats on the company’s board.
Bradley L. Radoff and Sudbury Capital Fund, who collectively own 12.8% of the outstanding stock of LifeVantage, filed a proxy statement seeking to nominate three directors to the company’s board.
The statement and letter to shareholders claims that while the company’s products and business model offer potential for growth and increasing shareholder value, that has been stymied by Chairman Gary Mauro and “certain over-tenured directors, who lack relevant experience, have delivered persistently poor performance and taken actions that run directly counter to stockholders’ interests.”
The statement claims that total shareholder return over the past decade under Mauro’s leadership has declined more than 70%. For benchmark comparison, the S&P Consumer Staples index increased 141% over the same period.
The statement also calls into question LifeVantage’s $30 million sponsorship deal with local pro soccer team Real Salt Lake, claiming the company significantly overpaid for the benefits that can be realized from the partnership.
Management claims changes already underway
LifeVantage responded with its own proxy statement and letter to shareholders, urging that they reject the Radoff-Sudbury group’s advances. The company says the group is seeking 40% of the board seats while owning less than 13% of the shares. It further maintains that many of the changes the group is seeking are already in process under the current management and that recent financial results have been promising.
The company’s annual stockholders meeting, at which time mailed in-proxy votes and in- person votes will be tallied, is scheduled for Nov. 2, 2023.
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