v3.26.1
Acquisitions
 12 Months Ended
Jun. 30, 2026
Business Combination, Asset Acquisition, Transaction between Entities under Common Control, and Joint Venture Formation [Abstract]  
Acquisitions

Note 15 — Acquisitions

On October 1, 2025, the Company closed on the purchase of critical assets of Global Organics Merchants, LLC, dba LoveBiome (“LoveBiome”) pursuant to an asset purchase agreement between the parties. LoveBiome was a direct sales company focused on comprehensive microbiome care and wellness solutions. The acquisition is being accounted for as a business combination in accordance with ASC 805.

The Company has made an allocation of the purchase price of the business combination to the assets acquired as of the closing date. No liabilities were assumed. The following table summarizes the purchase price allocations relating to the business combination (in thousands):

 

 

Valuation

 

Cash consideration paid

 

$

3,743

 

Earnout - current

 

 

200

 

Earnout - long-term

 

 

300

 

Total purchase price

 

$

4,243

 

Assets acquired:

 

 

 

Inventory

 

$

321

 

Other assets

 

 

257

 

Intangible assets

 

 

3,200

 

Total identifiable assets

 

 

3,778

 

Goodwill

 

$

465

 

 

The earnout payments are contingent upon revenue targets of the Company for the fiscal year ending June 30, 2026, as well as LoveBiome standalone revenue targets ending on the first and second anniversaries of the closing date. The fair value of the earnout was estimated using a Monte Carlo simulation option method.

The assets acquired were recognized at their estimated acquisition-date fair values, with goodwill representing the excess of the purchase price over the fair value of the identifiable assets acquired. The purchase price includes the fair values of other assets that were not identifiable, not separately recognizable under GAAP (e.g., assembled workforce) or of immaterial value. The goodwill of $0.5 million arising from the acquisition consists largely of the synergies and economies of scale expected from combining the operations of the Company and LoveBiome. All of the goodwill was assigned to the single operating segment. Part of the goodwill recognized will be amortized for tax purposes and more may become amortizable as the earnouts are paid. In addition, certain legal costs have been capitalized as goodwill for tax purposes and are being amortized.

Under ASC 740, the Company is required to recognize part of the identified goodwill as deferred taxes. Therefore, the carrying value of goodwill was reduced to $465,000 and $57,000 was recorded to deferred taxes as of June 30, 2026. The total amount of goodwill expected to be deductible for tax purposes is $0.2 million.

The Company recorded changes in fair value of the estimated earnout consideration to be achieved (as a result of lower than forecasted revenue performance). The change in estimates resulted in a reversal $0.4 million during the fiscal year ended June 30, 2026, and is recorded in selling, general, and administrative expenses. As of June 30, 2026, the total estimated earnout was $0.1 million.

During the fiscal year ended June 30, 2026, the Company incurred approximately $0.2 million in acquisition-related costs associated with the LoveBiome transaction, which are recorded in selling, general, and administrative expenses in the Company's consolidated statements of operations.

In connection with the acquisition of LoveBiome, the Company identified and valued the following intangible assets:

 

Category

 

Amount
(in thousands)

 

 

Useful Life
(Years)

 

Trade name

 

$

700

 

 

 

5

 

Know-how

 

 

300

 

 

 

5

 

Consultant sales force

 

 

2,200

 

 

 

7

 

Total acquired identifiable intangible assets(1)

 

$

3,200

 

 

 

 

 

(1) The fair value was determined using Level 3 assumptions.

The fair values of the trade name and know-how were determined based on the relief-from-royalty method, a form of the income approach, using royalty rates of 1.5% and 1.0%, respectively. The fair value of the consultant sales force was estimated based on the present value of incremental after-tax cash flows, discounted at 28.5%.

Amortization expense related to acquired intangible assets was $0.4 for the fiscal year ended June 30, 2026.

Unaudited supplemental information on a pro forma basis, as if the LoveBiome transaction had been consummated on July 1, 2024, is as follows (in thousands):

 

Year ended June 30,

 

 

2026

 

 

2025

 

Revenue

 

$

185,124

 

 

$

237,293

 

Earnings

 

 

5,019

 

 

 

10,158

 

The unaudited pro forma supplemental information is based on estimates and assumptions, which the Company believes are reasonable. These results are not necessarily indicative of the Company’s consolidated financial condition or statements of operations in future periods or the results that actually would have been realized had the Company and LoveBiome been a combined entity during the periods presented. These pro forma amounts have been calculated after applying the following adjustments that were directly attributable to the LoveBiome transaction:

•
The supplemental pro forma earnings for fiscal year ended June 30, 2026 were adjusted to exclude the $0.2 million in acquisition-related costs associated with the LoveBiome transaction, and instead, these costs are reflected in the pro forma earnings for the fiscal year ended June 30, 2025.
•
These pro forma amounts have been calculated after applying the Company's accounting policies and adjusting the results of LoveBiome to reflect additional amortization that would have been charged assuming the fair value adjustments to intangible assets had been applied from July 1, 2024, as well as adjustments to other selling, general, and administrative expenses for contracts that were not assumed in this transaction, with the consequential tax effects.

Total revenue related to LoveBiome consultants from the date of acquisition to June 30, 2026 was $6.3 million. Determining earnings from the date of acquisition is impracticable as LoveBiome has been fully integrated into the Company and costs are not segregated between LoveBiome and the legacy LifeVantage business.