Herbalife adjusts metric for Active New Member growth, actual results much lower; shares down 15% premarket

|About: Herbalife Ltd. (HLF)|By:, SA News Editor

In  a regulatory filing, Herbalife (NYSE:HLF) discloses that its relatively new metric for "Active New Member" growth that it reported in some of its recent earnings calls was calculated wrong. It says database scripting errors led to the errant inclusion of additional categories of data in calculating the metric for parts of 2015 that were not included in the prior period calculations and quarterly aggregation issues that created period-to-period variances depending on when the greatest level activity occurred during the relevant period. The problem was not identified earlier because there was limited visibility into the likely rate of change upon its first use. The company has taken corrective action and states that the situation does not impact its previously reported financial results.

In most cases, the revised growth numbers are lower that those previously reported. Examples include: worldwide active new member growth excluding China for Q4 2015 is now 3.2% instead of 16.7%; U.S. active new member growth for Q4 2015 is now 30.7% instead of 71.0%; EMEA active new member growth for Q4 2015 is now 17.7% instead of 44.0%.

A few of the growth numbers went up when adjusted: worldwide ex. China for Q2 2015: 3.7% vs. 1.0%; Brazil Q3 2015: 71.9% vs. 65.0%; Mexico Q2 2015: 21.7% vs. 14.0%.

Shares are off 15% premarket on light volume.

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