Herbalife (HLF -3.48%) shares plunged in after-hours trading on Monday, falling more than 12%, after the multi-level marketer turned in its third-quarter results.

Earnings, revenue and guidance came in lower than expected, and one of Herbalife's board members -- Leroy Barnes, chair of the company's Audit Committee -- announced his retirement.

Earnings fall short
For the third quarter, Herbalife earned an adjusted $1.45 per share on revenue of $1.3 billion. On an unadjusted basis, Herbalife's $0.13 per share in earnings was a dramatic decrease from the $1.32 it earned last year. Analysts had been looking for Herbalife to report an adjusted $1.51 per share on revenue of $1.32 billion.

Regionally, Herbalife's South and Central American business came under pressure, with volume points (a measure it uses to track product sales) declining by 17% on an annual basis. Herbalife's North American business also declined, but by a far more modest 4%. China was a notable bright spot -- volume points in the Middle Kingdom rose 24% from the prior year.

Guidance disappoints
Perhaps more significant, the company's outlook fell short of what analysts had been anticipating. For the fourth quarter, Herbalife expects to earn $1.30 to $1.40 per share, and for the full year, it sees earnings of $5.80 to $5.90 per share. Analysts, however, had been looking for around $1.69 per share for the fourth quarter and $6.26 for the full year. Revenue growth could also be disappointing. For the full year, Herbalife expects revenue to rise 3.5% to 4.3% compared with last year. Analysts had been expecting revenue to grow around 9%.

Herbalife suggested that the poor results could be due to changes the company is implementing globally, such as limits on the amount of product customers can initially purchase. However, management believes these adjustments will benefit Herbalife in the long run. Herbalife is also suffering on the basis of currency valuation -- specifically, Herbalife believes the declining value of the Venezuelan bolivar relative to the U.S. dollar will weigh on its fourth-quarter and full-year earnings by $0.22 and $0.45 per share, respectively.

Barnes will step down
In a separate press release, Herbalife announced that board member Barnes plans to retire in February. Barnes, as chair of the Audit Committee, will complete Herbalife's annual filing with the SEC before he steps down.

No specific reason was given for Barnes' retirement, and though Barnes had been on the board for more than a decade, it comes at an interesting time in Herbalife's history. In addition to Barnes, Herbalife has lost three of its others directors within the past 12 months.

The war rages on
With the company missing estimates for earnings, revenue, and guidance, it's difficult to spin this quarter as anything but bad news for Herbalife shareholders. Still, the long-term Herbalife story is bigger than quarterly reports.

Herbalife remains under investigation by the Federal Trade Commission, and so long as that investigation remains ongoing, Herbalife shares should remain volatile. If Herbalife were to reach a favorable deal with the FTC -- perhaps a modest fine, or some slight changes to its underlying business model -- Herbalife shares could rocket higher as the many short sellers betting against Herbalife cover their positions.

However, if the FTC finds that the company is -- as hedge fund manager Bill Ackman has been arguing for nearly two years -- a pyramid scheme, shareholders could find themselves wiped out virtually overnight.

In the meantime, Herbalife's earnings suggest a business that's weakening, but where Herbalife shares trade in 12 or 24 months, assuming they still trade at all, is likely to be determined more by government action -- or inaction -- than by its financial results.